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Strategic directions for management accounting system in light of the theory of determinants | ||
| Journal of Administration and Economics | ||
| Article 1, Volume 0, Issue 78, 2018, Pages 1-12 | ||
| Author | ||
| A. M. D. Majeed Jassim al-Shara | ||
| Abstract | ||
| The theory of Constraints (TOC) is a managerial philoshy devloped by Ellyahu M. Goldratt in a series of books and articles.TOC is a systems approach based on the asumption that every organization has at least one factor that inhibits the organization ability to meet its objectives. The normal objective for a business is to maximization profit by assuring that the factor that limits production is used most efficiently. TOC is to identifying the constraining factor for manufacturing concerns,the constraining factor is often but not always the time available on a certain machine or process.. for companies that employ skilled workers and for many service organizations the constraint is often the time of one or a few key employees. Once the constraining factor has been identfied the next step is to determine the throughput per unit of the constraining factor. The key t o maximizing profit is to concentrate on selling and producing products that provide the highest throughput per unit of costraining factor. Implementation of TOC is often difficult because it may require a complete change in the way the company operates, according to the management accounting system for example selling and producing the product in the product line with lowest sales price per unit may maximize throughput. Use of TOC as a management philosofy is a dynamic process .Once the constraining factor has been identified.management should examine whether the constraining factor can be increased.if this is possible some other factors may be come the constraints and the analysis should be revised based upon the new circumstances. The research contains many discussing about TOC and illustrate how applying of TOC can lead to decisions that improve company profitability. | ||
| Keywords | ||
| Axis of accounting | ||
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