ABSTRACT

There is general consensus in industry on the need for change in measuresand management accounting practice. The previous chapters clearlydemonstrate that the common practice of using standard cost and efficiencies as the gauge to measure real-time decisions, reward local action, and make strategic resource decisions is less than optimal. I believe the reason companies continue to use the standard cost data, when they know it is suboptimal, is because management does not have any other methodology to control costs and focus improvement efforts and investment decisions. There has been no other practical alternative to correlate local actions to maximizing the performance of the organization until the ability to apply the Theory of Constraints was developed.