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Lean production philosophy, managerial accounting

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- Describe how managerial accounting is different from cost accounting.
- Describe the lean production philosophy.
- Compare and contrast accounting principles in lean production to those of typical production.

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- Describe how managerial accounting is different from cost accounting.

Cost accounting investigates the cost of items, typically inventory cost per unit, but also the cost of other business items or segments. Its main focus on what something costs as the name implies.
Managerial accounting is interested in decision-making, performance and financial management aspects of the firm. It is concerned with internal controls, performance metrics and rewards, giving the organization feedback about operations, and anticipating potential transactions and results (budgets, forecasts).

- Describe the lean production philosophy.

The lean production ...

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Accounting Problem: Mental Health Agency

Consider the following scenario:

Dr. Stephanie White, the Chief Administrator of Uptown Clinic, a community mental health agency, is concerned about the dilemma of coping with reduced budgets next year and into the foreseeable future but increasing demand for services. To plan for reduced budgets, she must first identify where costs can be cut or reduced and still keep the agency functioning. Below are some data from the past year.

Program Area Costs
Administration
Salaries:
Administrator $60,000
Assistant $35,000
Two Secretaries $42,000
Supplies $35,000
Advertising and promotion $9,000
Professional meetings/dues $14,000
Purchased Services:
Accounting and billing $15,000
Custodial $13,000
Security $12,000
Consulting $10,000
Community Mental Health Services
Salaries (two social workers) $46,000
Transportation $10,000
Outpatient mental health treatment
Salaries:
Psychiatrist $86,000
Two Social Workers $70,000
In an Excel spreadsheet:
- Provide a dollar range of costs to reduce budgets (worst and best case analysis).
- She needs to cut $94,000 in cost. Prioritize those cuts that can be made without impacting the operation or quality care of the organization.
For more information on creating Excel Spreadsheets, please visit the Excel Lab.
In addition to the Excel spreadsheet required to support your responses, you must prepare an APA formatted paper that will address the following:
- Describe how managerial accounting is different from cost accounting.
- Describe the lean production philosophy.
- Compare and contrast accounting principles in lean production to those of typical production.
- Describe how you would advise Dr. White to prepare for reduced budgets.

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