1. Managing Costs and Revenues--MBA I--Spring 2009 7-1 Managing Costs & Revenues Professor William F. O’Brien, MBA, CPA Spring 2009

2. Managing Costs and Revenues--MBA I--Spring 2009 7-2 Session 7 Lean Production Dairy Pak Case Graham Case

3. Managing Costs and Revenues--MBA I--Spring 2009 7-3 MALP Strategic Implications of Mgt. Acctg. Systems Quality choices can be affected Cost is fundamental Provides information on timeliness of production

4. Managing Costs and Revenues--MBA I--Spring 2009 7-4 Determinants Management Accounting System Cost Structure Environment Production Methods Strategic Choices -Structural Elements -Work Processes

5. Managing Costs and Revenues--MBA I--Spring 2009 7-5 Types of Production Methods Craft Mass Production Lean Production (Flexible Mfg. System)

6. Managing Costs and Revenues--MBA I--Spring 2009 7-6 Structure Differences Mass Inflexible single purpose High set-up time Low labor skill level Lean Multi-use equipment Low set-up time Skilled labor force

7. Managing Costs and Revenues--MBA I--Spring 2009 7-7 Work Process Differences Mass Supervisory control Precise control over supplier Standardized products Independent, sequential prod. develop. Lean Empowered workers Cooperative relationship w/suppliers Customer focused organization Concurrent, integrated design

8. Managing Costs and Revenues--MBA I--Spring 2009 7-8 Cost Structure Mass Driven by volume Allocation of fixed costs Lean Driven by process or activity

9. Managing Costs and Revenues--MBA I--Spring 2009 7-9 Mgt. Acctg. System in Lean Production Driver focused Value chain focused Limited need for inventory reporting Indirect cost orientation

10. Managing Costs and Revenues--MBA I--Spring 2009 7-10 Lean Prod--Attributes Technical Better decision relevance Driver focused External orientation Cross functional & value chain focus Better process understanding

11. Managing Costs and Revenues--MBA I--Spring 2009 7-11 MALP--Attributes, cont. Behavioral Team responsibility Multiple motivation Accountant as team player Quality commitment Global optimization Risk of burnout

12. Managing Costs and Revenues--MBA I--Spring 2009 7-12 MALP--Attributes, cont. Cultural Team responsibility Cooperation vs. competition Focus on overall common good Change in locus of power