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Nick Katko
Standard costing - and other full absorption product costing
methods - is actively harmful to the lean manufacturer.
Traditional standard costing methods calculate the product
costs wrongly, they lead to bad decision making that in turn
lead to reduced revenues & lower profitability, and the
processes required to maintain a standard costing system are
complex, time-consuming, and very wasteful. In addition,
standard measurements like earned hours, efficiency, machine
utilization, and absorption variances actively undermine what
we are trying to achieve through lean transformation.
This workshop will show how value stream costing is used
instead of standard product costing to provide excellent control
of costs, valid and meaningful information for decision-making,
and the financial numbers required for external GAAP reporting.
We will discuss how to create a simple, summary direct costing
of the value stream, weekly value stream income statements,
and how this information can be rolled-up to provide monthend
report for internal use and external reporting. Using a case
study we will demonstrate how pricing, quoting, margin
analysis, make/buy, sourcing, and other routine decisions can
be made quickly and easily using value stream costing.
Agenda:
- What is the standard costing problem?
- Value stream costing and value stream income statements
- Decision-making using value stream costing
- Making it happen
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