Operations Based Costing (OBC) incorporates the latest advances in Operations Research into Managerial Accounting techniques. Through the OBC methodology, the differences between Activity Based Costing and the Theory of Constraints are reconciled. OBC identifies wasted capacity and attributes the waste to specific causes. The resulting information from the approach enables management to identify their most profitable customers, service lines, and channels, as well as a clear course of action to improve the performance of each.