A new article by MBA faculty members Andrew Bargerstock and Ye Shi yet again shows MUM’s leadership in the field of lean accounting.
The article, entitled “Leaning Away from Standard Costing? Reconciling Lean Accounting Theory and Practice,” examines an inconsistency in lean accounting theory and practice related to use of standard costing in U.S. manufacturing enterprises that utilize Toyota-style process-improvement techniques.
It appears in the June 2016 issue of Strategic Finance, the monthly peer-reviewed journal of the Institute for Management Accountants (IMA).
According to Dr. Bargerstock, lean manufacturing is increasingly being adopted in the U.S., but research shows that when those companies don’t also adopt lean accounting, it results in waste and inefficiency.
“This is because variance analysis is replaced by work cell metrics that are considered to be superior methods for production control,” Dr. Bargerstock says.
Despite the advantage of adopting lean accounting, field reports and a 2013 research study conducted by Manjunath Rao at MUM indicate that the majority of mature lean manufacturers continue to use standard costing and variance analysis.
The article by Dr. Bargerstock and Dr. Ye sheds new light on possible reasons for why companies aren’t adopting lean accounting, including lack of knowledge about lean accounting, deeply entrenched institutional histories of standard costing, and inertia sustained by legacy enterprise resource planning systems.
The publication of this article is the latest recognition of MUM’s research in lean accounting by the IMA and annual Lean Accounting Summit.
Dr. Bargerstock was awarded Excellence in Lean Accounting Professor in 2009. Also, Dr. Rao was chosen as the Lean Accounting Student of the Year in 2011 for his PhD dissertation research that was partially funded by IMA.
In addition, Dr. Ye Shi was honored as the Lean Accounting Student of the Year in 2013 for her work in teaching and writing case studies while pursuing her PhD. And in 2011 and 2013, Dr. Bargerstock and Dr. Rao published articles in Management Accounting Quarterly on the lean accounting research conducted at MUM.