Profitability by product in a plastic injection molding company: application of the theory of constraints and profit accounting

Competition in business means that companies are constantly seeking to improve their operational performance so that they can achieve the best possible profitability at a fair price. The best profitability comes not only from the best operational performance, but also from the way in which the available resources are used. Among these resources are the company's fixed assets, its machinery and equipment, which must be used to maximize the profitability of the business, seeking to provide the highest possible profitability with the same investment. Among the various business segments, the plastics industry is a major player in Brazil and in Rio Grande do Sul. Given the importance of the plastics industry, together with the need to seek the best possible use of the companies' investments, the work sought to use Profit Accounting from the Theory of Constraints to develop a model for calculating and monitoring profitability by product in the plastics injection molding industry, so that it is possible to achieve the highest profitability from the available resources. As a result of the case study, the qualitative analysis showed that Profit and Loss Accounting is perfectly applicable to the plastic injection molding industry. It was found that in a company with a variety of products of different sizes and weights, the use of the Earnings Accounting method proved to be more appropriate than traditional cost accounting, which uses the gross margin to monitor profitability by product. Bearing in mind that the task of making the best combination of production and sales of the products measured by Profit and Loss Accounting can be laborious due to the number of products the company may have, the work presents as an alternative the use of Excel's Solver tool to assist in the analysis and decision-making process. The work allows industries in the same segment or with similar production processes to use it as material to reflect on their control instruments or as a model for reformatting their controls. The work concludes that Profit and Loss Accounting has proved to be superior to traditional accounting for a plastic injection molding industry to make decisions on how to use resources. The model created helps the manager to make more assertive decisions to better monetize the investment under his management.