Reduced Budget Plan U2IP Research Paper Example | Topics and Well Written Essays - 1000 words

Reduced Budget Plan U2IP - Research Paper Example Lean production philosophy has also been covered in the research paper. Comparison has been done between accounting principles in lean production with that of typical production. The project basically throws light on the cost perspectives in an organization. Managerial Accounting Vs Cost Accounting Managerial accounting encompasses cost accounting and covers a broader scope than cost accounting. Highlights on the differences between managerial accounting and cost accounting are enumerated below: Managerial accounting includes cost accounting as well as financial accounting whereas cost accounting includes cost information only for managerial use. Managerial accounting is carried out for decision-making whereas cost accounting is used for the purpose of ascertaining cost and cost control. Managerial accounting deals with qualitative as well as quantitative aspects whereas it deals with only quantitative aspects. Cost accounting involves working out cost per unit whereas managerial acc ounting includes further comparative analysis of figures and statements. Managerial accounting has a more future-oriented approach whereas cost accounting is historical in approach and makes projections based on historical data. Managerial accounting cannot be installed without a proper cost accounting system whereas cost accounting does not require management accounting for its installation. Lean Production Philosophy It is manufacturing technique to boost profitability and efficiency. It aimed at reducing the time lag between customer order and delivery by elimination of wastages in the production system. The companies in order to have a successful lean production system in place should practice if not all most of the technical requirements: Kaizen: Kai means continuous and Zen means improvement. It relates to continuous improvement in cost, design, quality and delivery. Kanban: It needs to be in place. Step change: To eliminate waste there is a need to make radical improvements o f an activity. Supplier base reduction: Attempts to reduce engagement with large number of suppliers. Cellular manufacturing: In order to reduce process, waiting and transport time it is essential to group closely all the facilities in place to produce a product. Total productive maintenance (TPM): It is aimed at improving consistency, capacity and reliability of machines. Five S and general visual management: Aimed at reducing inefficiency and clutter of any office or production system. Value and the seven wastes: The notion of value shouldn’t be ignored ever. Supplier development: Focus is on developing links with suppliers and working closely with them. Single minute exchange of dies (SMED): It is necessary to eliminate delays in change-over times on machines in order to improve work flows and reduce lead time. Single piece flow needs to be in operation: One complete product should flow through stages of operation at a time (Bhasin, 2004, pp. 57-58). Accounting Principles in Lean Production and Typical Production Lean production follows the same Generally Accepted Accounting Principles (GAAP) as in typical production. Lean accounting enables value based pricing i.e. by value streams focussing on customer value whereas in typical accounting is cost based pricing. Both enable inventory valuation but lean accounting values inventory better and easier. Lean accounting enables value stream financial improvement and control to pursue perfection whereas