Integrating Activity Based Costing with the Theory of Constraints for Special Manufacturing Decisions: An applied study

Abstract

Over I 00 years ago, the industrial revolution changed the way companies were run; size and efficiency became the major determinants of success that created industrial giants in steel making, transportation and oil production (Mckewon and Leitch, 1993). Now, the importance of information has increased as it has become the means to effective management of company resources. In this information revolution era, system integration has been a recent trend in the business environment with the objective of realizing more accurate and reliable information and avoiding problems that are related to single systems.

For example: a logistics management system (LMS) has been developed by IBM for operations management. The system combined expert system simulation and decision support system. In addition, it included computer aided manufacturing and distributed data processing subsystems which provide management with a tool to help in resolving crisis and planning (Turban, 1993, p.722). Also consolidation in real estate software vendors such as the recent acquisition ofDYNA by ARGUS and QUANTRA by SS & C as well as coordination between vendors to create links between their software platforms highlights the industry's thirst for integration (Loftin, 1999, P.34).

The role of accountants in this information era is not just to report information; but to participate in strategic management. This can be done through the development and implementation of new accounting models integrating financial and nonfinancial information (Joseph, 2006).