Differences Between Lean Manufacturing and Standard Costing

question 18

Essay

Differences between Lean Manufacturing and Standard Costing
Lean Manufacturing and standard cost accounting systems are not necessarily substitutes. However, very few firms use both lean manufacturing and standard costs. In fact, some management consultants who advocate lean manufacturing argue that firms should abandon their standard cost systems.
Required:
a. Concisely describe lean manufacturing.
b. Concisely describe standard costing.
c. Why do so few firms use both lean manufacturing and standard costing together?

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Definitions:

Short-Term Note

A debt instrument with a short maturity period, typically less than a year, used for business financing or temporary cash needs.

Interest Revenue

Income that a company earns from investments that pay interest, including savings accounts, bonds, or loans provided to others.

Company's Accounts

The financial records of a business, detailing its transactions, financial performance, and position, including assets, liabilities, revenue, and expenses.

Reconciling Information

The process of ensuring that two sets of records or financial transactions are in agreement.