Lean Management Essay Example | Topics and Well Written Essays - 2250 words

Lean Management - Essay Example From the research it can be comprehended that the models and concepts which influence the pricing decisions of a firm are management accounting decisions. The pricing strategy of a firm is influenced by several factors which include the fixed and variable costs of the firm and the environmental factors which include legal analysis and competitor analysis. Some of the specific concepts in cost accounting are lean accounting, resource consumption accounting, transfer pricing etc. Manufacturers need to consider various fields like the supply chain process, the assets risk to low cost etc. while determining an appropriate costing strategy for the firm. The term Lean Management means the principles that are used for lean production. The basic idea of the concept of lean manufacturing is to reduce the wastages incurred in any form in the firm. The wastages of the firm which can be minimized through the use of Lean Management principles are the defects in production as there is no proper ut ility of the product. The overproduction factor in firms usually leads to excess finished stock, inappropriate inventory control and the efficient less production system used. The concept of Lean Management is a derivative of the Toyota Production Systems (TPS). The TPS policy reduces the time gap between the customers’ order and the delivery to the customer. The JIT system of inventory also helps in nil wastage of stocks. Resource consumption accounting is a type of principle based management accounting which provides the managers with a decision sustain system for the organization. Another concept which affects the pricing decision is transfer pricing. Transfer pricing is quite applicable in case of the manufacturing organizations. Transfer pricing helps in reducing the operating costs and also helps in lowering the effective tax cost of global operations. â€Å"Using transfer pricing economics to map all the transactions in which the new plant will participate, with suppl iers and customers as well as with related parties, reveals hidden opportunities† (Transfer Pricing in the Automotive Industry 2006, p. 3). Resource consumption accounting is another model which provides managers with adequate management accounting system in order to support pricing or costing decisions in a firm. This concept was specially developed for advanced manufacturing. The resource based cost accounting involves resources, their costs, the quantity based modeling, the cost behavior. Lean management accounting and Toyota Production System are the most suitable models which can be quickly and beneficially applied in Maniac Plc. The lean management system will be useful in taking pricing decisions of the firm. â€Å"The lean management system is structured around three necessities of lean production: strategic planning, organizational structure and human resource capabilities† (Jackson & Jones 1996, p. 18). 2) Maniac Plc practices both standard costing as well as activity based costing system. Standard costing and variance costing are both costing types which play an important role in management accounting. The standard costing system is the estimation of the costs which are necessary for the procedure of