Discussion Week 7

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Managers often find themselves facing problems where the solution is not obvious. A tool designed for analyzing these complex questions is throughput accounting (TA), as Corbett describes in the article “Three-Questions Accounting.” TA requires you to determine how a decision will impact throughput, operating expense, and investment. The relationship among these factors can help you determine if a decision will improve profitability.

Think of how TA could affect your organization or one with which you are familiar. Think of a decision at the organization you chose and the effect the decision has had on the organization’s throughput and operating expenses. Also consider the decision’s effect on the amount of money invested in operations, such as people, processes, software, infrastructure, and current projects.

If you are not familiar with an organization in this situation or if you are restricted by confidentiality requirements, select a different organization. You can research organizations in the business press.

Prepare the following:

~ A brief description of the organization you selected and the decision this organization made

~ A description of the impact that the decision had on investments in operations, such as people, processes, software, infrastructure, and current projects

~Your determination of whether the organization made the correct decision, based on your application of the principles of throughput accounting (Justify your response.)

References:

Aghili, S. (2011). Throughput Metrics Meet Six Sigma. Management Accounting Quarterly, 12(3), 12-17.

Albright, T., Lam, M. (2006). Managerial Accounting and Continuous Improvement Initiatives: A Retrospective and Framework. Journal of Managerial Issues, 18(2), 157-74.

Corbett, T. (2006). Three-questions accounting. Strategic Finance, 87(10), 48–55

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