Costing techniques are 'cost down' tools, which can refer to a range of methods. In the recent past, different costing techniques emerged as alternatives to traditional accounting methods in which indirect costs (e.g., lighting, heating, marketing) were allocated in proportion to an activity's direct costs. This became unsatisfactory because two activities that absorb the same direct costs can use very different amounts of overhead. Thus, the need to have more meaningful costing techniques became apparent. Yet, the question still remains: must the old techniques be completely done away with? Apart from outlining the relevant concepts and applications, this course brings about an assessment of the relevance of traditional costing methods i.e., absorption, marginal and activity-based costing on the face of modern ones in particular throughput accounting. The essence of the assessment is to bring a case for or against using available management accounting theory and real-life examples.

Course Key Concepts: Absorption costing, Marginal costing, Activity-based costing (ABC), Key factor or limiting factor analysis, Theory of constraints (TOC), Throughput accounting (TA).

Learning Objectives
  • Discover, explain and apply absorption and marginal costing and reconcile the resulting profits/losses from these costing techniques.
  • Discover, explain and apply activity-based costing.
  • Recognize, discuss and apply the theory of constraints.
  • Identify, calculate and interpret a throughput accounting ratio (TPAR) and suggest how a TPAR could be improved.
  • Explore and apply throughput accounting to a multi-product decision-making problem.
  • Discover and discuss the case for or against the use of traditional/conventional costing techniques or throughput accounting in today‚Äôs business environment.
Last updated/reviewed: January 7, 2023
Course Complexity: Foundational
No advanced preparation or prerequisites are required for this course.
Please read the handout before you begin the video section of the course.
Education Provider Information
Company: Illumeo, Inc., 75 East Santa Clara St., Suite 1215, San Jose, CA 95113
Contact: For more information regarding this course, including complaint and cancellation policies, please contact our offices at (408) 400- 3993 or send an e-mail to .
Instructor for this course
Course Syllabus
  Learning Objectives for Comparing Traditional Costing Techniques with Throughput Accounting3:30
  Absorption and Marginal Costing15:48
  Absorption and Marginal Costing Implications - Part 118:10
  Absorption and Marginal Costing Implications - Part 216:38
  Absorption and Marginal Costing Implications - Part 314:54
  Activity-Based Costing6:52
  Example 134:55
  Example 213:56
Basics of the Theory of Constraints
  Throughput Accounting18:00
  Throughput Accounting Example 121:30
  Throughput Accounting Example 215:36
  A Multi-product Decision Making Problem21:08
  Throughput Accounting Ratio19:04
  Comparing Traditional Costing Techniques with Throughput Accounting4:03:43
  Slides: Comparing Traditional Costing Techniques with Throughput AccountingPDF
  Comparing Traditional Costing Techniques with Throughput Accounting Glossary/ IndexPDF