when using lean accounting traditional costing methods are replaced by value based pricing and lean focused performance measurements financial decision making is based on the impact on the company s total value stream profitability value streams are the profit centers of a company which is any branch or division that directly adds to its bottom line profitability 
marginal costing sometimes called cost volume profit analysis is the impact on the cost of a product by adding one additional unit into production it is useful for short term economic decisions marginal costing can help management identify the impact of varying levels of costs and volume on operating profit this type of analysis can be used by management to gain insight into potentially profitable new products sales prices to establish for existing products and the impact of marketing campaigns the break even point which is the production level where total revenue for a product equals total expense is calculated as the total fixed costs of a company divided by its contribution margin the contribution margin calculated as the sales revenue minus variable costs can also be calculated on a per unit basis in order to determine the extent to which a specific product contributes to the overall profit of the company history of cost accountingscholars believe that cost accounting was first developed during the industrial revolution when the emerging economics of industrial supply and demand forced manufacturers to start tracking their fixed and variable expenses in order to optimize their production processes 1cost accounting allowed railroad and steel companies to control costs and become more efficient by the beginning of the 20th century cost accounting had become a widely covered topic in the literature on business management 