Throughput accounting is management accounting technique used as means of measuring performance according to theory of constraints (TOC). It is in fact consist of an assembly of techniques which has their goal the maximization of output from a production system.
Put simply, a throughput accounting is simplified, principle based approach that offers managers supporting information for their decision making in order to improve company profit.
Throughput accounting provides the business intelligence used for maximizing profits. However, unlike cost accounting, which primarily focuses on ‘cutting costs’ and reducing expenses to make profit, throughput accounting basically emphasize generating more throughput. Conceptually, throughput accounting attempts to increase the speed or rate of which throughput is generated by entity product or service with respect to a entity’s constraints, whether that constraints is internal or external to the entity