Beware the new accounting myths

Article Abstract:

The backflush accounting method, which starts with the output of a company and works backward in allocating costs between inventory and goods sold, has been proposed as a means of reconciling accounting with the just-in-time (JIT) manufacturing method. The experience described in a Hewlett-Packard case study indicates that the backflush system is similar to the periodic system, which requires a physical inventory at the end of a fiscal period because of a lack of inventory accounting reports. JIT manufacturing requires more accounting and more information while the backflush system provides less accounting and less information to management on which to base decision-making.

Hewlett-Packard Co., Managerial accounting

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How the constraint theory improved a job-shop operation

Article Abstract:

Steel pole manufacturer Valmont-ALS faced mediocre inventory turn-over, excessive overtime, and a recession in its industry. The company adapted its job shop operation to a modified just-in-time (JIT) inventory system. Lead times for some products were reduced by half and due date shipment improved to nearly 90%. Shipping increased and there were virtually no personnel cutbacks. Shop overtime was kept to acceptable levels and shopping costs fell. The modified JIT method, or constraint operation, offers greater opportunities and benefits than any other cost control or scheduling system.

Machine shops, Cost accounting, Valmont Industries Inc., VALM

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