Lean Accounting

As Activity-Based Costing more realistically reflects cost than Standard Cost Accounting can, it merely reflects existing processes. It takes some time and effort to change the cost model to reflect any process improvements.

Process improvement results from lean initiatives are typically poorly reflected through Standard Cost Accounting methods. Sometimes even leading to doubts in lean principles.

In my mind, Lean Accounting and Value Stream Costing are the natural outgrowth from advanced costing methods and lean thinking. Box scores that contain both operational and financial metrics lead to highly improved decision making.