Question

How lean versus traditional production might affect a management accountant trying to calculate a company’s costs. How would the information a management accountant would use to determine company costs change depending on type of production?

Answer 1

Lean production is the latest technique of production. In traditional production the production of the products is based on the sales forecaste made by the company internally whereas in lean production the production is driven by the customer demand, product is produced only when there is order in hand. This helps to save cost of producing products which might not be sold in the future. In traditional production Work in process is viewed as normal process of operation while in lean production it is a sign that the process needs improvement, this will help in making the product process more efficient and reduce the labour hours of producing the product. In traditional production if a system is working than no maintenance is to be done while in lean production there is continous check on improving the process and the system. The traditional process is depended on the people and providing training to the workers while in lead production the processes are made such that they are error proofed. This would save a lot of time and cost. In short lean production makes the entire process efficient to save the time and cost involved to produce a product.

The above information can be use by management accountant by doing a comparison on the traditional production it used and on the lean production and apply the steps involved this would help him to know the change in cost involved in the production of product under lean production.