A Comparative Analysis of Management Accounting Systems on Lean Implementation

The adoption of lean principles and practices has become widespread in many industries since the early 1990’s. Companies are now beginning to realize that traditional costing and accounting methods may conflict with lean initiatives they are implementing. Consequently, important research questions are being raised. Which cost management and accounting approach required for companies that adopt lean principles and practices?

The primary objective of this research is to asses the impact of different management accounting systems on lean manufacturing as measured by performance metrics and to investigate the development of management accounting strategy which will support lean operations and will help to monitor the lean progress. Three management accounting alternatives investigated in this study are traditional management accounting, activity based costing and value stream costing. This study evaluates the overhead principles associated with management accounting alternatives to identify real product cost that will drive many business decisions. The financial measures commonly used are short-term and long-term profitability.