Tenn-Tech Plc Case Study Example | Topics and Well Written Essays - 1000 words

Tenn-Tech Plc - Case Study ExampleThe situation demands a prompt and a proactive transaction from the top management. Hence it is vital to bring in a new management accounting admission that is more in consonance with the prevalent developments and circumstances. Resorting to throughput accounting seems to be just the right admission for Tenn-Tech Plc in the existing scenario. However, this is easier s help oneself then done. This calls for a total paradigm shift on the part of the anchor players and the stakeholders at Tenn-Tech Plc.It is imperative for the top echelons of power at Tenn-Tech Plc to be cognizant of the marked shift in their perception that an adherence to a new management accounting system result call for. Throughput accounting go forth not be merely an another management accounting system, but will be in fact an entire new way in which the organization under consideration will be required to perceive itself and its role in the global market scenario (Throughp ut Accounting 67). The basic mistake with the activity-based costing system that till now was creation resorted to by Tenn-Tech Plc is that it believes that the efficiencies yielded by the changes wrought in the localize factors within the company, be it the marketing department, manufacturing or any other section, will automatically lead to heighten over all efficiencies (Corbett 38). That is why the directors and the top management are wasting their strength, time and efforts in criticizing and decision faults with the individual local sections within the company. While the Financial Director seems to be at loggerheads with the Marketing Director, the headsman Executive Boris Barker has already given way to a serious labour problem with the aid of the Management Accountant Huggenkis, both of them being guided by their obsession for covering the unreasonable overheads. No doubt such moves appear to be narrowly reactionary in their approach, rather then being all inclusive and visionary. The basic fault with the management accounting system at Tenn-Tech Plc is that it is based on the fundamental premise that for an organizational chain to be really strong, it is a must that all the colligate in it be really sturdy and tough (Corbett 41). This definitely sounds good, but is surely not veritable in a real life scenario.Throughput accounting is an alternative approach to management accounting that holds that the eventual(prenominal) strength of an organizational chain is determined by the strength of the weakest link in that chain (Corbett 41). This approach towards management accounting is based on the theory of constraints proposed by E.M. Goldratt in his novel The Goal. This approach will conclusively address the dilemma being faced by Tenn-Tech Plc, which is how to design a more in force(p) management accounting system. According to throughput accounting, the notion of allocating costs to products, which was till now being adhered to by Tenn-Tech Plc is inherently faulty and invariably leads to wrong decisions. As interpreted and suggested by the theory of constraints, Tenn-Tech needs to be viewed as a system that consists of several individual and interdependent elements. Thus the primary task before Tenn-Tech is to be conversant with the constraints existing within this system. According