Unit 2 – Cost Management
AIU Online – ACCT310
February 24, 2013
This is a paper that will explain the difference between cost accounting and managerial accounting. It will describe the aspects of the philosophy of lean production. Also, those principles will be compared to those principles of a typical production. Lastly, recommendations for the reductions needed for Dr. White’s clinic will be given.
Cost accounting systems are useful for managers to use when trying to figure out the best ways to determine the cost of producing and manufacturing their products. They help in ways to manage each activity done such as machine hours for particular business ...view middle of the document...
Some examples of cost accounting include standard costing, job costing, activity-based costing and batch costing. This particular type of accounting does not necessarily abide by any certain principles when done. It is simply figuring out the best possible methods of the costs of production that best benefits the company in terms of staying within budget as well as meeting the needs of the customers. (Wild and Shaw, 2012).
LEAN PRODUCTION PHILOSOPHY
This manufacturing technique was created to improve the profitability and efficiency of production in a business. The main concern within this philosophy is value. In terms of production, an activity, process or step must add value. If it does not add value to the product in the end, it is considered waste and terminated. It is simply the idea of getting more accomplished with less resources or processes possible that still results in great production. The key to this philosophy is mainly increasing value at the same time while minimizing the amount of resources used. The end results wanted consist of a perfect product, customer satisfaction and, thus, improving quality of business. (Wild and Shaw, 2012).
LEAN PRODUCTION/TYPICAL PRODUCTION
Typical production consists of the principles of manufacturing that involve being focused on the production of a particular number of units within a certain period. It assesses the risks of limited resources as well as demand that is unexpected by keeping reserve resources as back-up. Lean production focuses on what is actually needed at that given moment. This is more helpful to businesses because it improves and minimizes inventory and the manufacturing processes needed to produce; thus adding quality. The main accomplishment desired is assigning costs to manufacturing that birth value; hence, the matching principle. These costs can be put into...