Accounting for Managers: Interpreting Accounting Information for Decision-Making, Canadian Edition

READING 2

Teaching Special Decisions In a Lean Accounting Environment

Daniel Haskin, University of Central Oklahoma, USA

ABSTRACT

Lean accounting has become increasingly important as more and more companies adopt the lean enterprise model, or some variation of it. Cost and managerial accounting textbooks continue to use, almost exclusively, models based on standard overhead absorption, which, if used in a lean environment, will not accurately reflect the benefits from the movement to a lean enterprise, and may distort the impact of the changes. Because of these developments, accounting students should be exposed to lean accounting models beyond a brief introduction in their basic cost and management accounting courses. This paper presents a model for teaching decision making in a lean company that uses value stream costing for such decisions as special orders and make-or-buy decisions. The use of these models in cost and managerial accounting classes will be of benefit to the future cost/managerial accountants.

INTRODUCTION

As more companies transition from traditional accounting systems to lean accounting systems, the need to focus on particular decision processes under lean accounting becomes more urgent. As discussed below, lean accounting is an entirely different method of collecting information and using information in decision processes than is traditional accounting. A review of cost and managerial accounting textbooks indicates that current textbooks give only a cursory ...