In this paper I am going to discuss the difference between managerial accounting and cutting cost. I will also provide some of where lean production came from and how it started or originated from. I am going to also briefly touch on how Dr. White can prepare to cut budgets as well as the company and the other employees that surround her.
The difference between cost accounting and managerial accounting is that when talking about cost accounting it is mainly used within the company to manage the companies’ costs or even drop costs. Cost accounting is used internally and is primarily an internal mechanism, it is not tied with managerial accounting standards such as GAAP, and the steps to try and figure out where reductions in budgets and costs will be realistic.
When talking about lean production it actually came from the Japanese and originated in Toyota Company. The goal was to try and get rid of any area or sourcing, material or production related costs unless it was used and tied up directly to adding value to the production line. If this philosophy is used in the right manner than there is no waste, and the quality of products go up and in most cases the costs will reduce. One example that I can think have for learn production are the “kanban” or the pull production. What pull production is it’s when materials or goods are pull as needed from the central repository called a kanban. From the central repository they are than distributed to both demand and production forecasts.
There are seven different areas that cover waste reduction. The seven different targets are Transport, Inventory, Motion, Waiting, Overproduction, Overprocsessing, and lastly defects.
I think the way that Dr. White can prepare for cutting budgets is first and foremost, talk to the people surrounding her. She needs to go to her employees and be truly honest with them and let them know why she has to cut something’s for the company. She may have to let her employees know that some of them will be laid off due to the difference in the workload because now it has been reduced. If it is decided that she may have to lay some people off the best thing to do is to let them or inform them as early as possible so they will be ready for the
cut. Unfortunately, it has to be done and she has to prepare herself mentally as well. I am sure as a manager of a big company or even small ones laying people off or firing them knowing everyone needs their job is disheartening.