Constraints accounting is an

accounting Accounting, also known as accountancy, is the process of recording and processing information about economic entity, economic entities, such as businesses and corporations. Accounting measures the results of an organization's economic activit ...

technique, much like

throughput accounting Throughput accounting (TA) is a principle-based and simplified management accounting approach that provides managers with decision support information for enterprise profitability improvement. This approach identifies the factors which limit an or ...

, which focuses on ongoing improvement and implementation of the

theory of constraints The theory of constraints (TOC) is a management paradigm that views any manageable system as being limited in achieving more of its goals by a very small number of constraints. There is always at least one constraint, and TOC uses a focusing p ...

. It includes an explicit consideration of the role of constraints, a specification of throughput contribution effects, and the decoupling of throughput from operational expenses. Contrasting constraints accounting to

cost accounting Cost accounting is defined by the Institute of Management Accountants as "a systematic set of procedures for recording and reporting measurements of the cost of manufacturing goods and performing services in the aggregate and in detail. It includ ...

, while cost accounting focuses on price per unit, constraints accounting focuses on price per unit-of-time. This measure is known as 'product octane.' Maximizing octane can greatly increase profitability. Constraints accounting is not to be confused with accounting constraints, which are general limitations in the field of accounting.

References

{{reflist Management accounting Management cybernetics