10 Jan 2021

Lean Accounting – Target Costing

2021-09-16T04:42:21-04:00January 10th, 2021|Categories: Lean Accounting, Lean Learning, Lean Manufacturing|Tags: , , , , , , |

Cost-plus pricing can be fine when a lean manufacturer offers a standardized product with limited competition. Unfortunately, most manufacturers offer highly unique products or highly commoditized products. For these manufactures, target costing is a vital part of the product development process. Target costing involves understanding the needs and wants of customers, determining how much they are actually willing to pay for the value a product delivers, and defining the organization’s necessary profit before determining product cost.

7 Dec 2020

Lean Accounting – Capacity Management

2021-09-16T10:45:14-04:00December 7th, 2020|Categories: Lean Learning, Lean Manufacturing|Tags: , , , , , , |

Inventory management is vital to lean manufacturing success. On that note, before we can improve our inventory management processes it’s vital that we grasp a few basics. First, there are ultimately 3 different categories of inventory. Inventory accounts for all raw materials (RM), work in process (WIP), and finished goods (FG). Second, all inventory must be accounted for the manufacturer’s balance sheet, while all inventory changes must be accounted for on its income statement. Third…