Accounting Issues in a Lean Environment Pinnacle Technologies has recently implemented a lean manufacturing approach. A production manager has approached the controller with the following comments: I am very upset with our accounting system now that we have implemented our new lean manufacturing methods. It seems as if all I’m doing is paperwork. Our product is moving so fast through the manufacturing process that the paperwork can hardly keep up. For example, it just doesn’t make sense to me to fill out daily labor reports. The employees are assigned to complete cells, performing many different tasks. I can’t keep up with direct labor reports on each individual task. I thought we were trying to eliminate waste. Yet the information requirements of the accounting system are slowing us down and adding to overall lead time. Moreover, I’m still getting my monthly variance reports. I don’t think that these are necessary. I have nonfinancial performance measures that are more timely than these reports. Besides, the employees don’t really understand accounting variances. How about giving some information that I can really use? As noted by the department manager, the accounting system for a lean system should consider all the following unique characteristics except: a.There are more transactions to record under the lean system. b.All in-process work is combined with raw materials to form a new account, Raw and In Process (RIP) Inventory. c.Direct labor is combined with other costs to form a new account titled Conversion Costs. d.Nonfinancial performance measures are emphasized. e.Indirect labor is directly assigned to product cells; thus, less factory overhead is allocated to products
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Accounting Issues in a Lean Environment
Pinnacle Technologies has recently implemented a lean manufacturing approach. A production manager has approached the controller with the following comments:
I am very upset with our accounting system now that we have implemented our new lean manufacturing methods. It seems as if all I’m doing is paperwork. Our product is moving so fast through the manufacturing process that the paperwork can hardly keep up. For example, it just doesn’t make sense to me to fill out daily labor reports. The employees are assigned to complete cells, performing many different tasks. I can’t keep up with direct labor reports on each individual task. I thought we were trying to eliminate waste. Yet the information requirements of the accounting system are slowing us down and adding to overall lead time. Moreover, I’m still getting my monthly variance reports. I don’t think that these are necessary. I have nonfinancial performance measures that are more timely than these reports. Besides, the employees don’t really understand accounting variances. How about giving some information that I can really use?
As noted by the department
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