![Lean Briefs Logo](images/logos/briefs1.gif)
The
Newsletter of Lean Manufacturing & Factory Science
15
January
2004
www.strategosinc.com
Volume,
Variety and Product Costing
Lean
Accounting
Accounting
systems have a massive impact on organizational performance,
particularly in large organizations. They
influence everything from personal
behavior to business strategy. Yet many accounting systems
use a structure dating from the 1920's and a lot has changed since
then.
One
important issue is product costing. Most
accounting systems accurately reflect overall profit and loss; many do
not accurately reflect profit or loss on
individual products or components. The problem is
particularly severe in factories with a wide range of products and
volumes.
Our
new page on Product
Costing presents a simple, common-sense analysis of a
financial statement to demonstrate the issue. Hal Mather used this
some years ago and his presentations were memorable.
Activity
Based Costing (ABC) is one way to address the problems of
traditional systems. But ABC has its own set
of problems. In the coming weeks we will examine some of
these issues. In addition Glen Navis
(formerly of Deere & Co.) will show a simple alternative to ABC
called Volume Adjusted Costing..
All
the best,
Quarterman
Lee
You
may forward this Lean Briefing to colleagues or use it in your
publication. We only ask that you do so in its entirety. |