Dedicated picked quantities of material aren't reported to a kanban or production order. ![]() This method introduces a truly lean concept for reporting material consumption. Instead, variances are calculated per production flow over a period. The main difference between backflush costing and standard cost is that, for backflush costing, variances aren't calculated per kanban or finished product. The products that are received from the production flow are deducted from WIP at their standard cost. The standard cost inventory model group is used. In the backflush costing method, the direct materials that are consumed are accumulated in the production flow's work in progress (WIP) cost account. This article introduces the concept of backflush costing that is used for Lean manufacturing.Ĭosting for Lean manufacturing enables the production flow to use the cost accumulation method that is known as backflush costing.
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