LEAN

ACCOUNTING

Kholoud labady
Lean accounting:

Another simplified product costing system that can be used with JIT (or Lean Production System)
systems.

When a company uses JIT production, it must focus on the entire value chain of business functions (from
suppliers to manufacturing to customers) in order to reduce Inventories, lead times, and waste.
 Value stream

The resulting improvements in the value chain led some JIT companies, to develop cost-focused
organizational structures and systems On Value Streams - All the value-added activities needed to
design, manufacture and deliver given product or product line to customers.

Value stream accounting is “tracking revenue and the associated variable costs required to
generate those sales.”
 Traditional accounting Lean accounting

Mass production Demand based production

Unsold stock No unsold stock

Financial transaction only Non financial transaction also

May leads to loss Measure performance with accuracy, hence,

less risk of losses.
Manuela Corporation manufactures toner cartridges and ink cartridges for use with its printers. It makes two models of
toner cartridges in one manufacturing cell and two models of ink cartridges in another manufacturing cell. The
following table lists revenues, operating costs, operating income, and other information for the different products
Using lean accounting principles, Manuela’s managers calculate the value-stream operating costs and
operating income for toner cartridges and ink cartridges, not individual models, as follows:
 o gain insights, Manuela’s lean accounting system, like many lean accounting systems, compares value-
stream costs against costs that include costs of all purchased materials.
 Doing so keeps the company focused on reducing its direct materials and work-in-process inventory

 Note that Manuela excludes unused facility costs when calculating the manufacturing overhead costs of
value streams because unused facility costs do not add value to value streams.

 Manuela also excludes rework costs when calculating its value-stream costs and operating income
because these costs are non-value-added costs. Companies also exclude from value-stream costs common
costs such as corporate or support-department costs that cannot reasonably be assigned to value streams.
 Critics of lean accounting
that it does not compute the costs of individual
products, which makes it less useful for making
decisions
that it excludes certain support costs and unused
capacity costs. As a result, decisions based on
lower value-stream costs may cause managers to
underprice products.
that, like backflush costing, it does not correctly
value inventories under Generally Accepted
Accounting Principles (GAAP).
Proponents of lean accounting
argue that the lack of individual product costs is not a
problem because most decisions are made at the product
line level rather than the individual product level and that
pricing decisions are based on the value created for the
customer (market prices) and not product costs.
argue that the method overcomes this problem by adding
a larger markup on value-stream costs to compensate for
some of these excluded costs.
However, the method’s proponents are quick to point out
that in lean accounting environments, work-in-process and
finished-goods inventories are immaterial from an
accounting perspective.
 The Impact of Using the Lean Accounting Tools on
Improving the Lean Planning Level in the Jordanian
Industrial Public Shareholding Companies

1 RANA MUSTAFA AIROUT , 2 FADYA BURHAN

ALHAJAHMAD
 Introduction:
The industrial sector witnessed many changes and developments. For instance, such developments
include: developments to the production methods. Many industrial companies have been showing
much attention to lean production. The lean production dimensions that have been receiving attention
include:
continuous improvement, the value added to customers, cost reduction, quality achievement, and
elimination of the wastage of resources.

They have been receiving attention in the aim of making a competitive advantage. The lean
accounting concepts and methods today don’t fit with those developments. Thus, those companies
today search for accounting tools that fit with lean production. Such accounting tools include: lean
accounting tools.
Problem statement
The focus of this research through the link between the application of lean accounting tools
Improving the level of lean planning in the Jordanian industrial public shareholding companies

Research questions
1. What is the level of application of lean accounting tools in Jordanian industrial public shareholding
companies?

2. What is the level of interest of the Jordanian industrial public shareholding companies in lean
planning?

3. What is the effect of applying lean accounting tools on improving the level of lean planning in
Jordanian banks?
Conceptual model

Lean accounting tools

Target cost

Management by Policies

Continuous improvement Lean planning.

The points box

Employee satisfaction
Methodology

This study is based on the use of the descriptive correlative approach, for its relevance to the purposes of
the current study related to “the impact of the application of lean accounting tools in improving the
level of lean planning in Jordanian industrial public shareholding companies.

The study also used the survey method to obtain data from its primary sources. that is by developing an
appropriate questionnaire to measure the variables of the study model, and after distributing it to the
study sample, the appropriate statistical methods were used.
 Population and Sample

The population of the present study consists of the industrial companies listed on the Amman Stock
Exchange until 31/12/2020, which are (42) industrial companies.

The study sample included the industrial companies applied for tools Lean accounting formally
identified (31) industrial companies after direct contact with the industrial joint stock companies listed
on the Amman Stock Exchange until the end of 2020. , department head, administrative or cost
accountant, chief accountant, internal auditor, production employee) in these Jordanian industrial
joint-stock companies. (341) questionnaire forms were distributed to the study sample members, and
314 questionnaires were retrieved and 15 questionnaire forms were excluded that were not valid for
statistical analysis, thus reaching the number of valid questionnaires for analysis. The statistician has
(309) questionnaires at a rate of 90.6%, which is a statistically acceptable percentage.
RESUL
T
It was found there is a significant effect of applying the combined lean
accounting tools (target costing, management by policies (Hoshin), points fund,
continuous improvement, employee satisfaction) in improving lean planning in
Jordanian industrial companies.