Beyond Performance Management

25

LEAN ACCOUNTING

What is this practice and how effective is it?

Lean accounting is a relatively new term that describes appropriate cost management approaches for lean organizations. It enables operations managers to better understand cost drivers and offers easier ways to understand and manage the costs that contribute to satisfying customers, using “value stream costing.” But, as we will illustrate, it means embracing lean manufacturing and overhauling the entire cost accounting system.

Alternative names and related topics: value stream costing; just-in-time management; box reporting

The vast majority of manufacturing companies still use standard costing to control costs and set prices. In standard costing, the cost of producing a particular ...