Diamond Technologies has recently implemented a just-in-time manufacturing approach. A production department manager has approached the controller
Question:
Diamond Technologies has recently implemented a just-in-time manufacturing approach. A production department manager has approached the controller with the following comments: I am very upset with our accounting system now that we have implemented our new just-in-time manufacturing methods. It seems as if all I’m doing is paperwork. Our product is moving so fast through the manufacturing process that the paperwork can hardly keep up. For example, it just doesn’t make sense to me to fill out daily labor reports. The employees are assigned to complete cells, performing many different tasks. I can’t keep up with direct labor reports on each individual task. I thought we were trying to eliminate waste. Yet the information requirements of the accounting system are slowing us down and adding to overall lead time. Moreover, I’m still getting my monthly variance reports. I don’t think that these are necessary. I have nonfinancial performance measures that are more timely than these reports. Besides, the employees don’t really understand accounting variances. How about giving some information that I can really use? What accounting system changes would you suggest in light of the production department manager’s criticisms?
Step by Step Answer:
Financial and Managerial Accounting Using Excel for Success
ISBN: 978-1111993979
1st edition
Authors: James Reeve, Carl S. Warren, Jonathan Duchac