ABSTRACT
A great deal of mystique surrounds the subject of accounting, the third rail of management. It is governed by thick volumes of regulations presided over by auditors and regulators. One does not change the way accounting is done without a great deal of evidence that existing rules do not fairly present economic reality. And yet, increasing numbers of companies are questioning the validity of using existing cost accounting for their Lean manufacturing operations. They are searching for methods of accounting that are consistent with the assumptions underlying the radical changes they have made in their manufacturing operations-changes that have turned the traditional assumptions of manufacturing on their heads. So we begin our discussion of this subject by addressing the basic question, “Why is Lean Accounting important?” Our intent is to demonstrate that serious problems crop up when companies that adopt Lean manufacturing use traditional cost accounting. Then we set the stage for succeeding chapters to explain the accounting methods that support the new manufacturing.
