Part 5/8: Understanding Your Economic Engine: Product Profitability
Traditional cost accounting is not always 100% accurate when trying to determine which products are the most profitable to manufacture in your company. Why? Simply put, it does not factor in your business’s constraints.
Through a factory model example, Coach Rick Phelps discusses how you can accurately calculate your rate of throughput dollars per minute which will determine the relative profitability of each product. This form of accounting provides a clearer understanding of issues in your company and a path to solving them quickly so you can gain greater profitability.
Watch Part A and B of the vlog to learn more!