Abstract
This paper will help to identify the interrelationship factor of cost management in lean production system. Standard overhead costs are sum up of expected direct labor & machine hours. In-fact major problem of cost is not direct labor or material, but the cost allocation. Before direct labor was a huge expense for the organizations, but now usually all works is done by robots and electronics instruments, so direct labor cost is almost less than 8% of the total costs. But in opposite side overhead cost is higher than before because extensive usage of machineries. As shown in Table 1 and 2, any changes in a product mix can mislead and extra addition any other product costs, if direct labor saving took for product B, so product A will bear extra cost of overhead because of changes in product B, in-fact no changes in product A process. The most advanced level in the lean production is “Four Wall” Transfer to finished products and vendor receipts. The control requirements of four walls are: Continuous product flow, short lead time and few scrap.
Highlights
Lean manufacturing idea first time developed by the Mr Henry Ford
On the assembly line of Model T Automobile, he used the idea of continuous flow
The variances analysis in lean manufacturing some experts consider it is an enemy, because too much insist over material price some time can be the cause of poor quality and delivery problems can occur frequently
Summary
Lean manufacturing idea first time developed by the Mr Henry Ford. In Model T Automobile manufacturing he set very tight standard of productions. Cost Management task advanced to be a Valuation of Inventory b Performance measurements & analysis c Product Pricing & Costing Traditional costing system why distort to the products’ cost. Because it was using single, volume based cost driver. Every time whenever products manufactured, that’s cost incurred (it’s assumed). Actual cost of products we can calculate but it’s become very difficult when many products are manufacturing at different rates and moving simultaneously among different products units, so by standard cost, products are controlled and measured
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
