ABC v TOC: Same cloth as absorption v marginal, different style and cut.

Management Accounting (UK), April, 1998 by Tollington, Tony

The accounting response to the growth of advanced manufacturing technologies and related management philosophies is restricted by the adherence to obsolete costing methods, such as absorption costing, according to Goldratt. However many accountants claim that Goldratt's Theory of Constraints (TOC) is a variant on a marginal-costing theme. ABC costs activities based on resource consumptions, and was designed as a way of generating accurate full product costs. TOC is a holistic way of management thinking, with the issue ot time and quality at its heart.

According to Goldratt (1990), the accounting response to the rise of advanced manufacturing technologies and related management philosophies is limited by the adherence to obsolete costing methods, including absorption...

Read the rest of this article with a Free Trial at HighBeam Research.

Premium Content Partnership | HighBeam Research provides an in-depth online archive library of reference works.