Assignment 2/2

It is based on the theory of constraints Theory of constraints views the company as a system in which there exists interdependence relations between the elements . Throughput Accounting increases the money generated by the business . If the firm is able to generate more money than it could earn as interest by keeping it in the bank then it is known as throughput . Throughput is not money shuffling rather it is fresh money that is being brought from the outside . The basic difference between Throughput Accounting and traditional accounting is that throughput accounting

does not track costs to products (Corbett 1999

Lean accounting has been used by many companies so as to increase their profits . Most companies are still using the more traditional and conventional methods of management accounting . An example of a company that implemented lean accounting and is now reaping its benefits is Watlow Electric Manufacturing Company . The management at Watlow Electric Manufacturing Company unleashed the true power of lean accounting into their organization (Brosnahan , 2008

Watlow Electric Manufacturing Company started with the implementation of lean accounting a few years ago . Lean accounting has helped Watlow Electric Manufacturing Company to streamline and strengthen its sales and planning process of operations . The company can now evaluate the forecasted demand of sales by analyzing the impact of demand on available machine and the capacity of employees and the availability of materials to meet the forecasted demand . The capacity , financial and operational outcomes and results are now forecasted theses are most possibly generated by the demand . Sales volume of the company has increased 15 . Returns on sales have increases almost by the same magnitude . Lean accounting has also been started at other facilities of the company . The reason for the success of lean accounting at Watlow Electric Manufacturing Company can also be...