Throughput costing was an outgrowth of the Theory of Constraints.

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Throughput costing is a concept developed as part of the Theory of Constraints, which is a management approach aimed at identifying and overcoming constraints in production processes to increase overall efficiency and profitability. Throughput costing is focused on maximizing the throughput, or rate of production, by identifying and controlling the factors that limit it. This approach recognizes that not all production costs are equal and that some expenses, such as labor and material costs, may not have a direct impact on throughput, whereas others, such as direct materials, do. Throughput costing is seen as a more effective way to evaluate and manage production costs than traditional cost accounting methods, such as activity-based costing, which can be limited in their ability to identify and address constraints.

Throughput Costing Was an Outgrowth of the Theory of Constraints