Question

Lean accounting

  • 11 August 2021
  • 6 replies
  • 91 views
A

Hi;

 

We are embarking on a road to implement lean accounting (different from lean manufacturing) in our environment. Are there members here that went through similar process and can share some insights or documentation for the process you went through?

 

Thanks

 

Alex

6 replies

B
Userlevel 3

Alex, 

I am interested in this lean accounting also.

My brief study of it, is to look at the value stream costing versus department costing.  This can be accomplished through some standard functionality of sales category and product group.

These two “attributes” on the sales order line will drive the chart and department segments using standard functionality in Epicor. 

Bruce

Bruce Larson Principal Consultant bruce@larsonsolutions.com Larson Solutions
A

Hi;

 

Thanks for your response. We are actually looking at it from a different angle. The accounts and cost centers are no changing and there is no need for posting rules changes. At the heart of it, what it means to us is not having labor and burden rates on MoMs (and shop floor employees). MoM cost will carry material component only.

 

Alex

S
Userlevel 4

Hi

If you don’t want labor/burden costs then make sure the Resource Groups and Resources are setup with zero rates:

 

A

Agreed. We are planning to 0 out both the resource rates as well as shop floor employees rates.

 

Thanks

 

Alex

A
Userlevel 1

Curious what your reasoning is for doing this, since it is regressive if you have a full absorption costing model in place already.  I have switched multiple contribution margin (what you call lean accounting which is not GAAP compliant) companies to fully absorbed gross margin accounting (acceptable under GAAP).

-Anthony

A

Hi Anthony;

 

I am not familiar with the reasoning behind it. We are in a fully absorbed environment currently and apparently there are advantages in going to a lean accounting where costs will be only material and subcontract. No labor or overhead.

 

Alex

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