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ACCT 200:  Foundations of Accounting II

Packet #2 - Refined Costing Systems and Lean Operations

What is the business problem and how can accounting help to solve it?

· What benefits do ALL types of companies gain from analyzing activities and cost drivers, even if they don’t follow through with using a full-blown ABC costing system to determine job costs?

· Video:  Secret life of eggs.  What is the impact of this activity on the profit? People? Planet?

Would any costs go up if this new labeling system was used?

· List some examples of activities that companies have pushed out to their customers in order to avoid having to incur the cost of those activities themselves.

· What is a good way to identify activities and potential efficiencies that could be achieved?

Lean Operations:  Have you ever worked at a job or been in a situation where you thought, “what a waste of time” or “there is a more efficient way to do this”?   Describe your experience.   

What is the basic idea behind Lean thinking?

What is the basic idea behind Six Sigma?

What kind of wastes do we typically find?  “DOWNTIME”   (Often referred to as the 7 wastes, leaving out “N”. Watch the YouTube video: “7 wastes” by lenquiu.)

D= T=

O = I=

W= M=

N= E=

What about environment wastes?   W   A   S    T    E

The House of Lean:  A set of tools to decrease waste and increase efficiency.  Companies wanting to implement lean thinking should begin by building the foundation (bottom level) first.  Notice the “roof” is continuous improvement.  It is the overarching principle in Lean thinking.  Lean companies are never satisfied with the status quo…they are always trying to improve efficiency and eliminate waste.

5s:  Workplace organization.  “A place for everything and everything in its place”.  What are the 5s’s?      Why is workplace organization so important?   

1)

2)

3)

4)

5)

Traditional systems = “push”; Lean systems = “pull”.  Describe what is meant by these terms.  Can you think of any fast food chains that operate under a push or pull system?

What are the implications of a Lean/JIT environment to the accounting and inventory system?  

Inventory= “The visible result of uncertainty and lack of information.”   What are the drawbacks of having a lot of inventory?   Are there problems associated with having too little inventory?

So far we’ve discussed the bottom floor in the “house of lean” as well as batch size reduction.  Now let’s look at a few of the other tools in the house.  Why is each of the following helpful/important?  What specific waste(s) do they eliminate?  

· Backflush Costing

· POUS (Point of Use Storage)

· Quick Changeover

· Value Stream Mapping

· Pull/Kanban,

· Continuous Flow and Takt Time