Throughput Accounting

Throughput Accounting is a management accounting approach that focuses on maximizing a company's profit by analyzing the contribution of each product or service to overall financial success. It emphasizes the importance of "throughput," which is the rate at which a business generates money through sales. Instead of primarily focusing on costs, it encourages businesses to optimize processes that enhance throughput, reduce bottlenecks, and streamline operations. This method helps managers make informed decisions to improve efficiency and profitability by highlighting what truly drives financial performance within the organization.