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Activity-based costing (ABC) and the theory of constraints (TOC) are viewed as methods that are: Interchangeable...

Activity-based costing (ABC) and the theory of constraints (TOC) are viewed as methods that are:

Interchangeable
 
Auxiliary
 
Mutually exclusive
 
Complementary
Business   Accounting   
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Answer #1

Theory of constraints (TOC) and Activity Based Costing (ABC) can be used complementery.

TOC and ABC provide information useful to the decision makers if they interpret the decision

Theory Of Constraints (TOC) seeks to maximize profits through proper management of bottle necks and constraints. It has short term emphasis with long term implications.

goal: to improve profit and system optimization.

Activity Based Costing (ABC) - model that measures long term cost of resources consumed to perform activities.

goal: to provide the main source of information for activity based management.

TOC tries to balance the flow of work but don't try to balance the plant capacity.

ABC measures in used capacity costs to manage

capacity.

Hope above information is useful

with regards

Thank you..

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