Classifying accounting information for internal users of an organizations is one way to support the needs of information for managers. Managerial accounting has three main objectives, namely: (1) provide information for planning activities of the organization; (2) provide information for controlling the activity; (3) provide information to make effective decisions. Theory of constraints is a method used to perform continuous improvement in manufacturing and nonmanufacturing activity. It is characterized as a “thinking process” that begins by recognizing that all resources are limited to the most critical factor that is referred to as a constraint. One of the most interesting issues in the managerial accounting issue is the incentive-based compensation using a balanced scorecard. This research proposes theory of constraints as a performance measurement tool in the four perspectives of the balanced scorecard as an alternative to short-term measurement methods. The outcome framework in this research needs to be proceed to the next stage in upcoming researches.
Keywords: constraints, performance measurement, balanced scorecard