Management Accounting: Feed Forward and Asian Perspectives

201 Pages·2004·0.77 MB·English

by  Akira Nishimura

Management Accounting
Feed Forward and Asian Perspectives
Akira Nishimura
Management Accounting
Also by Akira Nishimura
ACCOUNTING IN THE ASIA-PACIFIC REGION(co-editor with N. Baydoun and R. Willett)
Management Accounting
Feed Forward and Asian Perspectives
Akira Nishimura
© Akira Nishimura 2003
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First published 2003 by
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ISBN 1–4039–1868–6
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A catalogue record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data
Nishimura, Akira, 1938–
Management accounting:feed forward and Asian perspectives/Akira Nishimura.
p. cm.
Includes bibliographical references and index.
ISBN 1–4039–1868–6
1. Managerial accounting—Japan. 2. Managerial accounting—Asia.
3. Managerial accounting—United States. I. Title.
HF5657.4.N57 2003
658.15(cid:2)11—dc21 2003050457
10 9 8 7 6 5 4 3 2 1
12 11 10 09 08 07 06 05 04 03
Printed and bound in Great Britain by
Antony Rowe Ltd, Chippenham and Eastbourne
Contents
List of Tables and Figures viii
Preface and Acknowledgements x
1 Introduction 1
1.1 Introduction 1
1.2 Japanese management accounting and feed
forward control 2
1.3 A comparative study of Japanese and Western
management accounting 4
1.4 Feed forward control and management accounting
in general 7
1.5 The comparative study of Asian management
accountingandtheimpact of target costing on
Asian management accounting 9
2 The Control Functions of Accounting and
Management Accounting 11
2.1 Accounting and the control function 11
2.2 The control functions of accounting and accountability 13
2.3 Accountability and disclosure 14
2.4 Controllability and accountability 18
2.5 Conclusion 20
3 The Development and Future of Management Accounting
inJapanand the USA: A Comparison of Management
Philosophies 23
3.1 The development of Japanese management accounting
up tothe1970s 23
3.2 The development of management accounting in
the USA 25
3.3 Characteristics of contemporary Japanese management
accounting:cost and the just-in-time (JIT) system 27
3.4 Comparison of US and Japanese management
accounting practices 31
3.5 Future aspects of management accounting development 34
3.6 Conclusion 35
v
vi Contents
4 Developments in Japanese Management Accounting and
theirImpacton British and New Zealand Companies 37
4.1 Introduction 37
4.2 The management accounting system in Japan and its
differencesfromthe American type of management
accounting 38
4.3 Horizontal organization and two-way management 43
4.4 Horizontal two-way management and the Japanese
social environment 47
4.5 Nissan New Zealand and Japanization 51
4.6 Conclusion 54
5 Transplanting Japanese Management Accounting and
CulturalRelevance 56
5.1 Introduction 56
5.2 Culture and management accounting 56
5.3 Japanese management accounting and culture 59
5.4 Transplanting of Japanese management in the West and
in otherAsian countries 61
5.5 Transplanting of the management system and
transfer cost 63
5.6 Conclusion 68
6 Asian Economic Growth and Management Accounting 70
6.1 Introduction 70
6.2 Development of management accounting and Japanese
managementaccounting 71
6.3 The present situation and the characteristics of
management accounting in Asia 76
6.4 The transfer of Japanese-style management accounting 82
7 Japanese Management Accounting and its Effects on the
Asian-Pacific Region 86
7.1 Introduction 86
7.2 Japanese management organization and management
accounting 87
7.3 Management accounting in the Asian-Pacific
Region and Japanese management accounting 92
7.4 The integration of high quality and low cost in
Southeast Asian countries 95
7.5 Conclusion 97
Contents vii
8 Implications of Target Costing and its International
Application 98
8.1 Cost design and target costing in Japan 98
8.2 Investigations of practical cost design, or target
costing in Japan 100
8.3 Cost target and target cost 102
8.4 Target costing in the Taiwanese Guorui Car Company 106
8.5 Target costing in the Handan Steel Company, China 108
8.6 Conclusion 111
9 Integrated Management Accounting and the Analysis of
CostReduction 113
9.1 Introduction 113
9.2 Fundamental problems in recent management accounting 113
9.3 Concerns of today’s management accounting 116
9.4 New paradigm and management accounting 118
9.5 Activity-based costing 120
9.6 Cost design, or target costing 123
9.7 Integrated cost accounting 126
9.8 Analysis of cost reduction and feed forward 133
9.9 Cost reduction analysis and accounts procedure 135
9.10 Conclusion 137
10 Feed Forward Cost Accounting and Strategic Management 139
10.1 Introduction 139
10.2 Strategy and accounting 140
10.3 Strategy and feed forward control 143
10.4 Preceding literature on strategic management
accounting 146
10.5 Target cost accounting and strategic management 149
10.6 Conclusion 156
11 Conclusion 158
Notes 163
Bibliography 170
Index 179
List of Tables and Figures
Tables
3.1 Popularization of planning in Japanese companies 24
3.2 Comparison of the USA and Japan on quantitative analysis 27
3.3 Aspects of management accounting 28
4.1 Usage of costing in Japan and the USA (percentages) 40
4.2 Profit appropriation of Japanese affiliates in foreign countries
(moneyamounts in billion yen) 55
5.1 Japanese management in the UK, New Zealand and Taiwan 62
5.2 Profit on investment in Japanese overseas affiliated companies
in foreign countries (percentages) 64
5.3 Sales profit rate in Japanese overseas affiliated
companies (percentages) 64
5.4 Ratio of local procurement of parts by Japanese overseas
affiliates in each area, 1992 (percentages) 65
5.5 Number of seconded managers and ROI in electronics
and transport equipment industry 66
6.1 The development stages of management accounting 72
6.2 Present situation of management accounting in Japanese
manufacturing firms 74
6.3 Management accounting practices in Taiwan
manufacturing firms 77
6.4 Management accounting practices in Korea 78
6.5 Management accounting practices in Singapore 79
6.6 Management accounting practices in China 81
7.1 Financial results of Japanese overseas affiliated companies
in the electronics and transportation machine industries 87
7.2 Productivity and capital in Japanese overseas affiliated
companies(money amounts in millions of yen) 88
7.3 Comparison of management accounting practices between
Malaysia,Singapore, and Thailand (usage rate) (percentages) 93
8.1 Practices of cost design (target costing) in Japanese companies 100
8.2 Comparison of traditional with Japanese target
costing systems 105
9.1 Comparison of the paradigms of the old and new
management systems 119
9.2 Transformation of fixed overheads to direct cost 130
9.3 System of profit management in Honda 132
9.4 Analysis of cost reduction 137
viii
List of Tables and Figures ix
10.1 Differences between the two management accounting
systems 141
10.2 Recent examples of deficit product and loss in 2001
(billionJapanese yen) 144
10.3 Cost design and conventional strategic costing 149
11.1 Feedback and feed forward in cost accounting 161
Figures
2.1 Financial and management accounting 21
2.2 Development forms of management accounting 21
3.1 Framework of management accounting 32
3.2 Recent development of management accounting 33
5.1 Japanese management in Europe 61
6.1 Development of management accounting until 2000 82
8.1 Cost design activity in the Guorui Motor Company 107
8.2 Diagram of target costing in Handan Steel Company 109
9.1 Development of management accounting 129
9.2 Accounts organization of cost reduction variance 136
10.1 Recent trend of feed forward control 145
10.2 Integration of the two strategies 145
10.3 Ex postsystem and formal accounting system 150
10.4 Target costing and formal accounting system 151
10.5 Outline of target costing (cost design) activities 152
10.6 Feed forward and cost bookkeeping 155
11.1 The relation of feedback and feed forward control systems 159
11.2 Accounting function and management accounting 161