Reality of Recession - Essay Example

One of the economic conditions that has really affected the market environment that different kinds of companies are in today would be the reality ofrecession. However, despite the thin financial setting, some companies are still able to thrive through the help of lean production. This philosophy could simply be put as “preserving value with less work”. This is demonstrated when production practice puts a lot of consideration in balancing expenditure of resources and at the same time the creation of higher value for customers to enjoy by optimizing production flow and processes, increasing efficiency, using empirical methods, and lastly decreasing waste to decrease unneeded expenses.

This kind of production practice affects a company’s accounting practices greatly. There are actually two kinds of which, first is managerial accounting and second would be cost accounting. To differentiate both, the former is concerned with incorporating all levels and parties involved with every direction their company chooses to go, that is giving much priority in providing information to managers who direct and control its’ operation as a whole to have total control on actual results to plans and benchmarks.

On the other hand, the latter is merely for cost determination and budget creation of a certain product or service. Going back to the philosophy of lean production, companies that practice this would lean more on managerial kind of accounting, where business processes are all integrated from processes to cost allocation to be able to manage the quality of product and satisfaction they can give to customers (Recognizing the Difference between Cost Accounting and Management Accounting, n.d.). Toyota is one of the companies that experienced the triumph of lean production.

Their philosophy of thinking globally but acting locally is put to action as they integrate the design of the car and their manufacturing process to gain efficiencies and be able to lower the cost of their cars while satisfying global needs (The Triumph of Lean Production, n.d.). This indeed is the key to the future of companies in the midst of recession. Bibliography: BBC NEWS. The triumph of lean production. (n.d.). BBC News - Home. Retrieved from http://news.bbc.co.uk/2/hi/business/6346315.

stm Recognizing the Difference between Cost Accounting and Management Accounting. (n.d.). Accountant Search, Accountancy, Accounting Services & Find an accountant. Retrieved from http://www.accountant-search.com/cost-accounting-vs-management-accounting.html