Comparison UKUSA VS Germany

1
Comparison UK/USA VS Germany

• Germany
• Costing systems
• Traditional costing systems but emphasis on
  inventory valuation for financial accounts
• Traditional cost allocations but only for
  recording. Little interest in ABC
• Pricing strategy market price
• Budgetary Controls
• Budgeting used mainly for monitoring purposes.
  Engineering and cost information used for cost
  control purpose.
• Cost controls are mainly achieved through
  improvement of technology

• UK/USA
• Costing systems
• Traditional costing systems for inventory
  valuation and decision making and control
• Traditional cost allocations and ABC
• Pricing strategy cost plus price
• Budgetary Controls
• Budgeting for several purposes such as cost
  control
• Rely heavily on standard costing system for cost
  control

2
Comparison UK/USA VS Germany

• Germany
• Investment Appraisal
• Little use of DCF (NPV and IRR)
• Non-financial measures (such as shorter lead
  times, increase flexibility etc) receive much
  more importance than financial measures
• Performance Criteria
• Use of accounting and non accounting data in
  performance measurement
• Strategic Emphasis
• Proactive emphasis on technological advancement
  and continuous improvement.
• Maintain long-term relationship with suppliers,
  customers and bankers

• UK/USA
• Investment Appraisal
• Rely on DCF (NPV and IRR)
• Less emphasis on Non-financial measures
• Performance Criteria
• Use of accounting data in performance
  measurement ROI and RI
• Limited use of non-financial measures
• Strategic Emphasis
• No emphasis on strategic consideration until
  recently
• Passive approach towards technological
  advancement and continuous improvement.
• No long-term relationship with suppliers,
  customers or Bankers

3
Comparison UK/USA VS Japan

• Japan
• Cost Structure
• In Japan, overhead costs are lower of total
  costs. Material cost higher
• Costing Systems
• Product costing, including standard costing
  utilised but emphasis on inventory valuation for
  financial accounts rather than decision making
  and control
• Conventional overhead recovery rates widely used,
  especially direct labour hours (reinforces major
  objective of reducing direct labour).
• Costing systems to reinforce changed strategic
  objectives
• Slightly lower uses of variable costing used
  more for control rather than pricing.
• Market price rather than cost plus price for
  pricing. Target costing plays important roles for
  costing and pricing
• Greater uses of departmental cumulative costing,
  less detailed cost tracing to products
• Budgetary Controls
• Revisions more frequent over shorter time cycles
• Kazien and target costing for cost control
  purpose (not traditional standard costing or
  budgeting)
• Controls directed at and reinforced by social
  controls rewards, group processes, consultation,
  company welfare, consensual decision making

• UK/USA
• Cost Structure
• Material lower, overheads higher
• Costing systems
• Traditional costing systems for inventory
  valuation and decision making and control
• Traditional cost allocations and ABC
• Pricing strategy cost plus price
• Budgetary Controls
• Budgeting for several purposes such as cost
  control
• Rely heavily on standard costing system for cost
  control

4
Comparison UK/USA VS Japan

• Japan
• Investment Appraisal
• Little use of DCF (NPV and IRR), pay back and
  accrual accounting measures used more
• Emphasis on quick payback
• Emphasis on shorter product life cycle, lead
  times, flexibility etc
• Performance Criteria
• Physical, engineering and quality standards
• Group bonus
• Strategic Emphasis
• Proactive emphasis on technological advancement
  and continuous improvement.
• Costing integration with design and engineering
• Cost information shared with with suppliers and
  customers

• UK/USA
• Investment Appraisal
• Rely on DCF (NPV and IRR)
• Less emphasis on Non-financial measures
• Performance Criteria
• Use of accounting data in performance
  measurement ROI and RI
• Limited use of non-financial measures
• Strategic Emphasis
• No emphasis on strategic consideration until
  recently
• Passive approach towards technological
  advancement and continuous improvement.
• No long-term relationship with suppliers,
  customers or Bankers