Lean Accounting evolved in order to promote goals consistent with the Lean philosophy. It has been accepted by companies for its ability to create accurate, useful, real-time financial data, useable by both managers and line employees. Correspondingly, Lean Accounting is more frequently included as a topic in university management accounting courses. We use a modified version of Peter J. Billington’s airplane manufacturing simulation, “A Classroom Exercise to Illustrate Lean Manufacturing Pull Concepts”, to introduce students to Lean Accounting (Billington, 2004). This teaching note is intended to help the reader run a Lean simulation, develop Lean Accounting Profit & Loss statements, and compare Lean Accounting profits to absorption costing profit. It also analyzes the behaviors encouraged by each method.

This article is from the Accounting Instructors’ Report, an electronic journal that provides teaching tips and insights to those who teach accounting and other business courses.

Contributors:

Gerald K. DeBusk, University of North Carolina Wilmington
Clay L. Moerland Jr., American Bicycle Group
Lawrence P. Grasso, Central Connecticut State University

Read Teaching Lean Accounting with a Manufacturing Simulation.