Download PDF by McVay, Gloria; Kennedy, Frances; Fullerton, Rosemary: Accounting in the Lean Enterprise : Providing Simple,

By McVay, Gloria; Kennedy, Frances; Fullerton, Rosemary

ISBN-10: 1420088580

ISBN-13: 9781420088588

ISBN-10: 1420088599

ISBN-13: 9781420088595

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Extra resources for Accounting in the Lean Enterprise : Providing Simple, Practical, and Decision-Relevant Information

Sample text

Thus, besides the general resistance to change that exists in all organizations, there is also a cultural barrier to overcome in the accounting field. In addition, accountants are not accustomed to significant interaction with operations people, so they may be uncomfortable in their expanded role as more of a strategic adviser than a bean counter. In order for accountants to be willing to change their reporting system, they must have the complete support of top management. They also must be assured and demonstrate that the new system is completely compatible with GAAP.

That means both workers and machines should avoid idle time at all costs. There is little concern about overproduction or producing only to demand. In fact, if production is limited to demand, and demand happens to be less than the original budgeted amount, an unfavorable volume variance results. Further, as more product is produced, many of the traditional financial measures that are typically followed are enhanced, again focusing on production rather than customer demand. For example, assets increase with higher inventories because of the established accounting assumption that inventory is an asset, rather than a cost.

All of the measures that are tracked by accountants should be highly visible, so everyone has feedback available that clearly demonstrates how their operations are performing. Performance measures should be moved out of the accountants’ computers and onto the shop floor, where all decision makers have access to the information that affects their jobs. Performance measures that relate to cell activity are placed on charts by the cells. Similarly, value stream performance measures are visible and located either by the value stream or in another highly visible spot in the plant where it is convenient to meet and discuss issues and results.

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Accounting in the Lean Enterprise : Providing Simple, Practical, and Decision-Relevant Information by McVay, Gloria; Kennedy, Frances; Fullerton, Rosemary

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