Articles
Volume,
Variety and Product Costing
Why
Low Volume Costs More
Death
Spiral of Overhead
Volume
Adjusted Costing
Copyright
2003 Strategos, Inc. |
![Lean Briefs Logo](images/logos/briefs1.gif)
The
Newsletter of Lean Manufacturing & Factory Science
30
January
2004
Volume
Adjusted Costing
and
Eluding
The Death Spiral of Overhead
Our
previous Briefing explored Product
Costing and the distortion inherent in traditional
accounting. In "The
Death Spiral of Overhead" we show how this warping
of overhead cost can lead to an agonizing corporate death. Distortion
leads to product proliferation and even more distortion in a slow,
sinister cycle of deteriorating profitability; a cycle that
plays out over decades.
Then,
Glen Navis, formerly of Deere &
Co., describes "Volume
Adjusted Costing" (VAC). In many situations where
volume is a primary cost driver, it gives most
of the accuracy of ABC with less complexity and far more
transparency. It is simple, easy and fast to implement. VAC
drives behaviors that, in turn, actualize strategy.
Our
next issue wraps up the series on accounting. Then, we go back to a more
technical topic: Process and Value Stream
Mapping.
All
the best,
Quarterman
Lee
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