Management Accounting for Lean Business

MANAGEMENT ACCOUNTING FOR LEAN BUSINESSES
Orest J. Fiume Retired Vice President - finance The Wiremold guild
copyright 2006 by Orest J. Fiume - All rights reserved. 1

Wiremold Before and After Lean
Assessed regard as West Hartford: Sales per Employee Gross Profit Throughput succession Product Devl Time # Suppliers Inventory Turns Working poll % Sales
(1) confederation Sold July 31, 2000
right of first publication 2006 by Orest J. Fiume - All rights reserved.

1990 $30 Million $90K 38% 4-6 Weeks 2-3 Years 320 3.4 21.8%

2000 (1) $770 Million $240K 51% 2 Hours 2 Days 3-6 Months 43 17.0 6.7%
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* W/C = A/R + Inv Trade Payables

LEAN
A Business Strategy non A Manufacturing Tactic Not A hail reducing Program
procure 2006 by Orest J. Fiume - All rights reserved. 3

A Simple Example
dickens Companies in Same Industry Using Same Equipment Company A Set Up Takes 1 Hour Company B Set Up Takes 1 Minute

Who Has Lowest Cost? Who Can Provide Best Customer Service? A Small Process Improvement Provides Enormous Strategic Advantage
Copyright 2006 by Orest J. Fiume - All rights reserved. 4

Corporate management accounting systems ar inadequate for todays environment
Relevance confounded The Rise and Fall of Management Accounting H. Thomas Johnson Robert S. Kaplan 1987
Copyright 2006 by Orest J. Fiume - All rights reserved. 5

LEAN ACCOUNTING?




All of the essentials of redbrick management accounting were established by 1930 … without any square changes since then

Brian Maskell
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Copyright 2006 by Orest J. Fiume - All rights reserved.

TYPICAL COST ELEMENTS
yesterday
O/H 10% Material 30%

forthwith

O/H 30%

Material 60%
gibe Labor 60%

Touch Labor 10%

Copyright 2006 by Orest J. Fiume - All rights reserved.

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STANDARD COST ABSORPTION ACCOUNTING
or so people do not understand a tired cost P&L statement Causes us to call forth labor hours, not product No linkage in the midst of labor hours and the customer Allocation costs based on labor...If you want to get a full essay, order it on our website: Orderessay



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