ABSTRACT
This chapter describes the features of the total cost management system in Japanese automakers. It aims to demonstrate that the management accounting system functions well in both target costing and kaizen costing in Japanese automakers. In broad terms, the step of corporate long- or middle-term profit planning is included in the process of target costing. The chapter discusses the target costing process into the following five steps: corporate planning, developing the specific new product project, determining the basic plan for a specific new product, product design, and the production transfer plan. The performance evaluation of target costing then is implemented after new cars have been produced for three months, as abnormal values usually arise during the first three months. Kaizen costing activities include cost reduction activities that require changes in the way the company manufactures existing products. For effective implementation of target costing and kaizen costing, each employee must tackle cost reduction positively.
