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    Case of Toyota in Japanese Management Accounting

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    Write about how the development of Japanese management accounting has an influence to the contemporary development of strategic management accounting and management accounting information.

    Please write about how the case of Toyota - how does the development of Japanese management accounting and contemporary strategic management accounting developments influence Toyota's accounting management

    1. what accounting techniques Toyota applied
    2. was it successful ?
    3. why or why not?
    4. was the technique appropriate to use in companies like Toyota
    5. what can be improved ? what should be done to increase efficiency ?
    6. what other techniques Toyota can adopt instead
    7. whether the upcoming trends in management accounting can affect Toyota's strategic accounting management.

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    Solution Preview

    Introduction: Management techniques are used by different Japanese manufactures widely. These techniques emphasizes on cost reduction rather than cost control. It is about the use of accounting information for making decisions regarding management and control functions (Ray, 2008). This paper describes about major techniques related to management accounting, which are used by Japanese companies. It also evaluates different benefits of these techniques that made companies better in various departments. This paper also suggests other techniques that could be more effective for the companies. It discusses the effect of the upcoming trends in management accounting on Toyota's strategic accounting management.

    Management Accounting Techniques of Toyota
    Toyota uses different management accounting techniques to bring total quality control in its operations. Main techniques used by this company are kaizen and lean accounting.

    Lean Accounting:
    Lean accounting is an accounting system that is used to change a company's accounting and management process. This system supports to measure and motivate good business practices in the company. This accounting method helps the company to eliminate waste, accelerate the process and minimize errors and defects and make the process clear and understandable. This method was first introduced by Toyota and other Japanese companies (Stenzel, 2008).

    It was successful for the company because, it increased sales volume of the company and provided better information for sound decision making. Prime impact of the method was on company's production system that helped in eliminating wastes and save wealth by reducing cost. It motivated long term lean improvement through lean focused information and measurements. Lean accounting techniques, in which Toyota is considered a leader, are used by product engineers to know cost accounting information for making decisions about alternative materials.
    Lean accounting supports lean manufacturing, lean product design, lean logistics, etc. The main motive of lean accounting is to improve the company's profitability by actively engaging all employees in cost-cutting and improvement operations. Lean accounting forced accountants to become forward thinking business partners (Smith, 2007).

    In contrast, this method also created some problems for the company. This technique was time consuming for the accountants as they had to spend more time in building information system to gather financial information. This method focused only on management accounting rather than financial accounting. It had to be implemented as a new process in each accounting period. Lean accounting made the overall financial accounting process very complex, by increasing the amount of internal accounting information prepared by accountants. The other drawback ...

    Solution Summary

    The case of Toyota in Japanese Management accounting is discussed in the solution.