Contrasting Lean Accounting with

Traditional Standard Costing

LEAN ACCOUNTING STANDARD COSTING
Value Stream Costing.
Standard Product Costing.
Quick, Simple, Actionable,
Complex, Wasteful,

Costing
Understood by All.
Confusing to All.

Drives Lean Behaviors. Drives Anti-Lean Behaivors.

Controls Costs Through Timely

Cost Accounting Reporting and Value Stream Reports Costs Monthly Against
Accountability. Departmental Budgets.

Departmental. Focused on Standard

Controls the Process. Maximizes
Performance Costs & Variances. Seeks Labor
Throughput. Vital Few. Drives the
Measurements Efficiency & Machine Utilization.
Company Strategy.

Simple Information Leading to Departmental Command & Control

Operations & Accounting Team-Work, Continuous Management. Creating Fear &
Share a Lean Culture Improvement, & Profit Growth. Individualism.

Accountants at the Gemba. Accountants in Their Offices.

Department Efficiency Focused on
Value Streams Focus on Value.
Organizing Your the Budget. Most Can Not See the
Measurements Drive Lean. Clear
Processes for Lean Value. Obscure Accountability &
Accountability & Authority.
Authority.
Monthly, After-the-Fact Reports.
Weekly & Monthly Financials. Plain
Only Finance Understands Them.
Financial Reporting English Reports. Reports Show
Standard Costing Provides
Actual, Real Numbers.
Misleading, Anti-Lean Data.

Provides External Reporting Provides External Reporting

External Reporting Complying with All Statutory Complying with All Statutory
Requirements and GAAP. Requirements and GAAP.

Measurements at Every Level Drive Production Reports & Variances

Daily Lean Improvement. Box
Continuous Improvement
Scores Show the True Impact of
Improvements.
Decisions Made by Seeing the True
Impact on the Value Stream.
Show Narrow & Misleading Data.
Improvement Comes Through
Engineering Projects.
Decisions Made Using Impact on
Standard Costs.

Decision Making
Standard Methods.
Financial Benefits Often Not Real.

Financials are Real & Bottom Line. Focus on Standard Cost Misleads.
Minimize Data Gathering.
Large, Complex, Highly Wasteful
Build Control Visually into the and Poorly Understood Systems
Data Gathering
Processes.
Gather Late and Largely Irrelevant
Daily, Local Problem Solving. Data.