Measuring Cost By Using Throughput Accounting to Rationalize Administrative Decisions
Purpose: The study aims at analyzing the performance of selected companies by using throughput accounting. It is an attempt to measure cost and find out how applying throughput accounting rationalizes adiminstrative decisions. Design/Methodology/Approach: The methodology used in this study is based on Throughput Accounting (TA) as a principle-based and simplified management accounting approaches. The General Company for Electrical Industries in Iraq was chosen to apply the practical aspect of the research due to the multiplicity of the products provided by the company. Findings: Following modern production methods leads to committing the economic units to the need to improve methods of calculating costs in order to comply with the new production environment, as traditional cost systems have fallen short of providing the necessary information and appropriate standards, as well as the degree of accuracy that must be provided for the purpose of carrying out the management of the economic unit with its various activities and managing its resources effectively. Practical Implications: The importance of this research comes from the role played by throughput accounting in addressing the negative effects resulting from mismanagement of all resources in the restricted activities. Originality/Value: The research concluded that the use of throughput accounting in cost measurement leads to improving operational performance and assisting the administration in making decisions that maximize the value of the economic unit.