Tag Archives: Decision-Making

A Better Way to Understand Product Profitability

Many companies calculate product profitability by subtracting a Standard Cost from the Price and calling it a Margin. But this calculated margin does NOT tell you how much money you are making. It tells you almost nothing about the profit … Continue reading

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Lean Accounting and Traditional Accounting Compared Part 10 – DATA GATHERING – WHY ARE OUR PROCESSES OUT OF CONTROL?

While traditional companies usually rely on an ERP/MRP system to create a semblance of control within their organization, lean companies focus on first understanding the causes of the chaos and then using continuous improvement to eliminate the reasons for the … Continue reading

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Lean Accounting and Traditional Accounting Compared Part 9 – DECISION MAKING WITH THE BOX SCORE

You cannot use standard costs for any kind of decision-making. And yet …..  most companies do. If we are going to make important decisions – like quoting orders, make/buy, capital purchases – we must have clear, correct, and comprehensive information. … Continue reading

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