From the above and also on our earlier discussion about TOC, it would seem that the two are in conflict with each other since ABC assumes most costs to be variable whilst TOC assumes most costs to be fixed. However, it should be noted that the nature of the two are different in the first place. ABC is actually a long-run cost management tool that considers all costs to be variable in the long run while TOC is more oriented towards the short run and therefore considers most costs to be fixed. Thus depending on the time horizon, ABC may suggest a particular course of action while TOC may imply another. It is possible to integrate the two methods together to better yield information that is useful to management. To determine when TOC should be used, management could consider the type of problems that it faces. If the problem relates to throughput and variable costs, TOC may be appropriate.
In summary, TOC requires less data and effort than ABC and is far easier to implement and operate.
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