ABSTRACT
This chapter focuses on simple ways to improve understanding of the office and production costs associated with the individual products. Separating the shop into two or more value streams, either by product type or by high- and low-volume products, is a great way to discourage allocations. The idea is to manage the complete flow of a product, instead of managing functional departments. Traditional accounting measures financial performance, but many companies use it to measure overall performance, which it was not designed to do. Lean accounting, on the other hand, is a set of performance measures that analyze processes and results. The benefits of lean accounting are increases sales by using value stream costing instead of standard costing; New quotes are more in line with actual cost impacts, and companies are less likely to outsource without good reason. Many books and experts can provide detailed descriptions of good lean accounting.
