APICS Certified Supply Chain Professional (CSCP) — Question 314

Which of the following statements best represents a supply chain approach to cost accounting using the theory of constraints (TOC)?

Answer options

• A. It tends to only focus on the actual running costs of the constraint.
• B. It forces cost reduction efforts on all operations because they all may become constraints.
• C. It tends to not allocate overhead to costs, making the accounting closer to cash flow.
• D. It tends to view all costs of poor quality as sunk costs for the entire operation.

Correct answer: C

Explanation

The correct answer, C, is accurate because the theory of constraints emphasizes cash flow by minimizing overhead allocation. Option A is incorrect as it limits focus to just the constraint's running costs. Option B wrongly implies that all operations must reduce costs equally, while option D misrepresents how poor quality costs are treated under TOC.