In Reply to the Questions and
Misunderstandings on Material Flow Cost Accounting
著者 Nakajima Michiyasu
journal or
publication title
Kansai University review of business and commerce
volume 6
page range 1‑20
year 2004‑03
URL http://hdl.handle.net/10112/12097
‑ ‑ ‑ ‑ ‑‑‑‑‑ ‑ ‑ ‑ ‑
-―---ー----—--—---'K a n s a i U n i v e r s i t y Review o f B u s i n e s s and Commerce No. 6 (March 2 0 0 4 ) , p p . 1 ‑20
On the D i f f e r e n c e s between M a t e r i a l Flow Cost Accounting and T r a d i t i o n a l Cost Accounting
‑ I n Reply to the Questions and Misunderstandings on M a t e r i a l Flow Cost Accounting
Michiyasu Nakajima
I n t h e y e a r 2000 t h e M a t e r i a l Flow Cost Accounting (MFCA) was i n t r o d u c e d through a p r o j e c t sponsored by t h e M i n i s t r y o f Economy, Trade and I n d u s t r y o f Japan ( M E T I ) as a t o o l o f t h e e n ‑ v i r o n m e n t a l management a c c o u n t i n g . Since t h e n , i t s u s e f u l n e s s has been documented and MFCA has been i n a p r o c e s s f o r a wider acceptance t o Japanese companies. MFCA, whose o r i g i n o f thought was developed i n Germany, has been h i g h l i g h t e d a s a new approach i n a c c o u n t i n g , b u t a t t h e same time s c h o l a r s a s w e l l as p r a c t i t i o n e r s i n b u s i n e s s have o f t e n r a i s e d such q u e s t i o n s as what new i t i s o r how u s e f u l i t i s i n a c t u a l b u s i n e s s , compared w i t h t h e t r a d i t i o n a l c o s t a c c o u n t i n g and t h e management a c c o u n t i n g . I n t h i s a r t i c l e t h e a u t h o r has s e l e c t e d and r e p l i e d t o some q u e s t i o n s which seem t o be i m p o r t a n t , and has f u r t h e r c l a r i f i e d misun‑
d e r s t a n d i n g s which were caused by l o o k i n g a t MFCA from a viewpoint o f t h e thought o f t r a d i t i o n a l c o s t a c c o u n t i n g , and has e x p l a i n e d t h e d i f f e r e n c e s between MFCA and t h e t r a d i t i o n a l c o s t a c c o u n t i n g . Based on h i s e x p e r i m e n t a l a p p l i c a t i o n o f MFCA i n s e v ‑ e r a l companies, t h e a u t h o r has c l a r i f i e d what MFCA i s and what r e a l v a l u e i t h a s .
Keywords: Environmental Management A c c o u n t i n g , M a t e r i a l Flow C o s t Ac‑
c o u n t i n g , Cost A c c o u n t i n g , Waste.
Foreword
As one o f t h e millennium p r o j e c t s sponsored by t h e M i n i s t r y o f Economy, Trade and I n d u s t r y o f Japan ( M E T I ) , t h e "Research Study on Development and Promotion o f Environmental B u s i n e s s , e t c . ( E n v i r o n ‑ mental A c c o u n t i n g ) " , from t h e f i s c a l year o f 1 9 9 9 f o r 3 y e a r s was c o n ‑ d u c t e d , and t h e r e s u l t s o f t h e s a i d r e s e a r c h study was p u b l i s h e d i n J u l y 2002 i n t h e "Work Book o f Environmental Management Accounting Tools"
i s s u e d by t h e M E T l . 1 I n t h e p r o c e s s o f works, 5 working groups i n t o t a l
ー
were s e t u p , w i t h t h e o b j e c t i v e o f developing a s p e c i f i c environmental b u s i ‑ ness t o o l , one o f which was t h e working group r e l a t e d t o M a t e r i a l Flow Cost Accounting (MFCA). I n t h i s g r o u p , MFCA which was o r i g i n a l l y d e v e l ‑ oped by IMU ( l n s t i t u t f u r Management und Umwelt, Augusburg, Germany) was a c t u a l l y i n t r o d u c e d t o a Japanese company f o r an e x p e r i m e n t a l p u r ‑ pose t o v e r i f y i t s u s e f u l n e s s , and t h e study was conducted f o r about 2 y e a r s s i n c e autumn o f t h e year 2000.
I n t h e p r o c e s s o f making a r e s e a r c h s t u d y , t h e q u e s t i o n s were r a i s e d and d i s c u s s e d from a t h e o r e t i c a l o r t e c h n i c a l p o i n t o f view on t h e r e l a t i o n s between MFCA and t h e t r a d i t i o n a l c o s t accounting by t h e companies h a v ‑ i n g p a r t i c i p a t e d t o t h e e x p e r i m e n t a l a d o p t i o n , t h e committee members, e t c . I n t h e p a s t , t h e author t r i e d t o e x p l a i n and r e p l y t o t h e q u e s t i o n s r a i s e d about MFCA by word o f mouth o r through r e p o r t s , e t c . (METI ( 2 0 0 2 ) , Nakajima and Kokubu ( 2 0 0 2 ) ) , as t h i s a c c o u n t i n g method was n o t f u l l y r e c ‑ ognized y e t , b u t even such e x p l a n a t i o n s o r r e p l i e s were made i n an i n d i r e c t way, and were inadequate t o understand i t completely as r e s u l t s .
I n 2003, t h e Seminars on t h e environmental management a c c o u n t ‑ i n g took p l a c e a c r o s s Japan by t h e Japan Environmental Management A s s o c i a t i o n f o r I n d u s t r y (JEMAI: h t t p : / / w w w . j e m a i . o r . j p / i n d e x ‑ e . a s p ) as a b u s i n e s s p r o j e c t consigned by t h e M E T l . 2 The o b j e c t i v e o f t h i s Seminar was t o c l a r i f y and promote t h e t h r e e k i n d s o f technique o f t h e environmen‑
t a l management accounting i n c l u d i n g MFCA which was taken up i n t h e r e c e n t l y p u b l i s h e d book c a l l e d "Work Book o f Environmental Management Accounting T o o l s " . Through such o p p o r t u n i t y as t h i s Seminar, i t i s t r u e t h a t t h e name o f t h e " M a t e r i a l Flow Cost Accounting (MFCA)" has become widely known among Japanese companies, but the name awareness does n o t n e c e s s a r i l y mean adequate understanding o f t h e c o n t e n t . Moreover, i t was n o t r a r e t h a t MFCA was m i s t a k e n l y understood o r e x p l a i n e d . One such example i s found i n an underestimate t h a t " t h e m a t e r i a l flow c o s t a c c o u n t i n g i s t h e same i n c o n t e n t as t h e t r a d i t i o n a l c o s t a c c o u n t i n g o r p r o ‑ d u c t i o n management technique which have been i n use i n many compa‑
n i e s , and i s a t o o l having o n l y a d i f f e r e n t name".
Even i n t h e academic e v a l u a t i o n o f MFCA, problems on i t s r e l e v a n c e i n p r a c t i c a l use were once p o i n t e d o u t . F o r example, t h e r e was an oppor‑
t u n i t y a t t h e 6 1 s t Congress o f Japan Accounting A s s o c i a t i o n (Musashi
U n i v e r s i t y ) t o make a p r e s e n t a t i o n on MFCA under t h e f r e e s u b j e c t p r o ‑
gram, and a l s o i n t h e same s e s s i o n one p r e s e n t a t i o n on MFCA ( P r o f .
3
Nobuyuki M i y a z a k i , I n t e r n a t i o n a l C h r i s t i a n U n i v e r s i t y ) , i n which he r a i s e d s e v e r a l p o i n t s on t h e r e l a t i o n between MFCA and t h e t r a d i t i o n a l c o s t a c ‑ c o u n t i n g . P a r t o f t h e s e p o i n t s a t i s s u e was r a i s e d by him a l o n e , b u t most o f them covered t h e i m p o r t a n t p o i n t s o f q u e s t i o n r a i s e d so f a r .
As shown i n t h e a b o v e , n e e d l e s s t o s a y , MFCA i s a t o o l o f t h e e n v i r o n ‑ mental management a c c o u n t i n g i n business p r a c t i c e a s w e l l as i n t h e a c a d ‑ emic c i r c l e . However, from t h e s t a n d p o i n t o f t h e a u t h o r who has been i n v o l v e d i n t h e i n t r o d u c t i o n o f MFCA and knows i t s u s e f u l n e s s and new p o t e n t i a l i t y , MFCA has n o t been f u l l y understood y e t , nor b e i n g a p p r o p r i ‑ a t e l y e v a l u a t e d . As MFCA i s a t o o l o f a management a c c o u n t i n g , i t i s a f a c t t h a t i t s u s e f u l n e s s w i l l be demonstrated under a c e r t a i n r e s t r i c t e d c o n d i t i o n o r o b j e c t i v e , and on t h e o t h e r hand, t h e magnitude o f i t s u s e f u l n e s s and p o t e n t i a l i t y has been c l e a r l y shown i n t h a t a l l t h e f o u r companies who p a r ‑ t i c i p a t e d i n t h e e x p e r i m e n t a l adoption o f t h e p r o j e c t sponsored by t h e METI have been t r y i n g t o extend t h e technique o f MFCA t o a l l t h e i r f a c t o ‑ r i e s . 3
When a new t o o l i s proposed and came i n t o wider u s e , such an above‑
mentioned misunderstanding o r p o i n t i n g out t h e m i s d i r e c t e d problems a r e l i k e l y t o occur a s u s u a l l y seen i n t h e p a s t , o r can be i g n o r e d . However, t h e i n f o r m a t i o n and e x p l a n a t i o n on MFCA have n o t y e t been g i v e n s u f f i c i e n t l y enough t o be a b l e t o rep~y t o t h e q u e s t i o n s and p o i n t s a t i s s u e . I n t h i s p a p e r , by way o f answering t o t h e p o i n t s r a i s e d by P r o f . M i y a z a k i , t h e author would l i k e t o c l a r i f y t h e q u e s t i o n s and misunderstandings on MFCA i n broader a s p e c t s .
I I
What view has a production process i n MFCA?
B e f o r e t h e a u t h o r r e p l i e s t o t h e p o i n t s a t i s s u e o r q u e s t i o n s , i t w i l l be
necessary t o e x p l a i n t o such people who have heard f o r t h e f i r s t time t h e
name o f MFCA what t h i s a c c o u n t i n g i s . However, a s t h e r e a r e a l r e a d y
some m a t e r i a l s a v a i l a b l e on what MFCA i s ( f o r example, Nakajima and
Kokubu ( 2 0 0 2 ) ) , t h e a u t h o r w i l l n o t make a d e t a i l e d e x p l a n a t i o n h e r e i n t h i s
a r t i c l e . I n t h i s S e c t i o n , f o r understanding t h e b a s i c concept o f t h e c o s t v a l ‑
u a t i o n i n MFCA, t h e a u t h o r w i l l e x p l a i n b r i e f l y t h e d i f f e r e n c e s between
MFCA and t h e t r a d i t i o n a l c o s t accounting on how t o grasp a p r o d u c t i o n
p r o c e s s .
I n p u t o f various
resources I (Consumption process o f economic value i n
product production) and ( v a l u e a t t a c h process t o production)
a production process
Products
C o l l e c t e d wastes ( t z e r o or negative v a l u e )
F i g . 1 : View o f P r o d u c t i o n Process i n the T r a d i t i o n a l Cost Accounting
F i g . 1 shows how t o p o s i t i o n a p r o d u c t i o n p r o c e s s i n t h e t r a d i t i o n a l c o s t a c c o u n t i n g and how t o v a l u a t e t h e c o s t o f a p r o d u c t as t h e output o f t h e p r o d u c t i o n p r o c e s s . Compared w i t h t h e view o f a p r o d u c t i o n p r o c e s s i n MFCA as c l e a r l y shown i n F i g . 2 , i t i s considered t h a t a p r o d u c t i o n process i n t h e t r a d i t i o n a l c o s t a c c o u n t i n g i s a consumption process o f an economic v a l u e , i n which t h e v a l u a t i o n o f an a t t a c h e d v a l u e t o a product by con‑
sumption i s regarded as c o s t a c c o u n t i n g , a n d , so f a r a s a normal produc‑
t i o n i s conducted, a l l t h e monetary v a l u e s o f i n p u t t e d r e s o u r c e s a r e t o be c a l c u l a t e d i n t h e p r o d u c t i o n c o s t o f a product as an output o f t h e c o r r e ‑ sponding p r o d u c t i o n p r o c e s s . 4 T h i s means t h a t a p r o d u c t should be b u r ‑ dened w i t h a l l t h e c o s t s o f employed r e s o u r c e s . Also i n t h e s t r u c t u r a l p i c t u r e which p o r t r a y s r e c o v e r y o f t h e p r o d u c t i o n c o s t by s a l e s o f t h e c o r ‑ responding product and thus y i e l d s p r o f i t , t h e t r a d i t i o n a l c o s t accounting makes i t a major o b j e c t i v e t o determine a p r o d u c t i o n c o s t t h a t should be r e c o v e r e d by s a l e s o f t h e corresponding p r o d u c t .
T h e r e f o r e , i t i s n o t i n t e n d e d t o determine a p r o d u c t i o n c o s t o f t h e
wastes t o be r e c o v e r e d by s a l e s o f t h e p r o d u c t . As shown i n F i g . 1 , g e n e r ‑
a l l y t o a l l appearances, wastes i n a f a c t o r y d e s c r i b e d i n a d o t t e d l i n e e x i s t
a s t h e ones which have accrued i n d i r e c t l y , being s e p a r a t e d from t h e p r o ‑
d u c t i o n p r o c e s s , and such wastes a r e p u t under c o n t r o l , b e i n g d i s r u p t e d
from t h e r e l a t i o n o f o c c u r r i n g causes and p l a c e s , a l t h o u g h t h e wastes a r e
s t o r e d s e p a r a t e l y as such i n a waste warehouse. Wastes, being a l s o d i s ‑
r u p t e d from a consumption value which i s a t t a c h e d from a p r o d u c t , based
on t h e g e n e r a l r e c o g n i t i o n a s w a s t e s , a r e normally grasped and d e a l t w i t h
5
a s a t o t a l l y d i f f e r e n t m a t e r i a l from a p r o d u c t ( c a u s i n g l o s s ) , having a z e r o v a l u e o r c a u s i n g expenses f o r d i s p o s i n g o f t h e w a s t e s . Thus, wastes a r e n o t r e c o g n i z e d a t a l l i n t h e t r a d i t i o n a l c o s t a c c o u n t i n g , as these a r e r e ‑ garded a s a c r e a t e d p r o d u c t completely s e p a r a t e d from p l a c e s ( p r o d u c t i o n p r o c e s s ) and v a r i o u s i n p u t t e d r e s o u r c e s (monetary value and p h y s i c a l v o l ‑ ume), having no r e l a t i o n w i t h a v a l u e c h a i n .
I n c o n t r a s t , as shown i n F i g . 2 , i n MFCA, wastes a r e n o t grasped a s a p r o c e s s o f v a l u e attachment w i t h an aim t o r e c o v e r value o f a product i n a p r o d u c t i o n p r o c e s s as seen i n t h e t r a d i t i o n a l c o s t a c c o u n t i n g , b u t , i n s t e a d , a l l t h e o u t p u t s from a p r o d u c t i o n p r o c e s s a r e t o be e q u a l l y v a l u e d . 5 P r o d u c t s ( q u a l i t y goods) shown i n F i g . 1 a r e grasped as p o s i t i v e p r o d u c t s , w h i l e wastes o r emissions ( m a t e r i a l l o s s ) 6 t o be grasped by a p r o d u c t i o n p r o c e s s a r e r e c o g n i z e d a s p r o d u c t s ( n e g a t i v e p r o d u c t s ) produced i n t h e corresponding p r o d u c t i o n p r o c e s s . I n t h i s r e s p e c t , being " n e g a t i v e " o f neg‑
a t i v e p r o d u c t s denotes such p r o d u c t s a s b e i n g o u t o f t h e o b j e c t i v e o f t h e corresponding p r o d u c t i o n p r o c e s s o r a s h a v i n g no m a r k e t a b i l i t y , b u t t h e i m p o r t a n t p o i n t i s t h a t , u n l i k e t h e t r a d i t i o n a l c o s t accounting as shown i n F i g . 1 , a p r o d u c t i o n p r o c e s s i n MFCA i s r e c o g n i z e d as t h e one producing both q u a l i t y p r o d u c t s and waste p r o d u c t s .
Under such p e r c e p t i o n , both p o s i t i v e p r o d u c t s and " n e g a t i v e p r o d u c t s "
a r e as a r u l e e q u a l l y v a l u a t e d i n c o s t by MFCA a s shown i n F i g . 2 . 7 Each product i s thus c o s t ‑ v a l u a t e d , based on what i t i s composed o f , from t h e s t a n d p o i n t o f i n p u t t e d r e s o u r c e s ( b y s o u r c e ) .
I n p u t
Quantity Center ( a production process) manufacturing p o s i t i v e products and negative
products
Output as good products
P o s i t i v e products
Output as wastes
Negative products
F i g . 2 : View o f Production Process i n the M a t e r i a l Flow Cost
Accounting ( R e f e r t o Nakajima and Kokube ( 2 0 0 2 ) , p . 6 8 )
I l l Answers to questions and misunderstandings on MFCA
I t was a l r e a d y mentioned t h a t IMU o f Germany developed t h e p r i n c i p a l concept and t h e b a s i c technique o f MFCA and continued t o make i t s e x p e r ‑ i m e n t a l i n t r o d u c t i o n . I n Japan, e x p e r i m e n t a l i n t r o d u c t i o n o f MFCA s t a r t e d , based on h e a r i n g a t IMU and t h e d i s c u s s i o n paper on MFCA i s s u e d by IMU which was used as a t e x t b o o k . However, a t t h e time o f t h e e x p e r i m e n t a l
i n t r o d u c t i o n o f MFCA i n Japan, i t s b a s i c concept and technique were u n ‑ d e r s t o o d , b u t t h e s p e c i f i c problems encountered i n t h e p r o c e s s o f i n t r o d u c ‑ t i o n were s o l v e d i n Japan alone t o proceed f u r t h e r f o r e x p e r i m e n t a t i o n , which l e a d t o development and e v o l u t i o n o f t h e o r i g i n a l Japanese v e r s i o n o f MFCA.8 T h e r e f o r e , MFCA o f IMU and t h a t o f Japan have a common r o o t , b u t i t s t r u n k s ( o b j e c t s o f i n t r o d u c t i o n , methods, e t c . ) have grown d i f ‑ f e r e n t l y a t t h i s p o i n t o f t i m e . Under such s i t u a t i o n , i n which both MFCAs a r e same i n t h e b a s i c c o n c e p t , t h e author w i l l answer t o t h e q u e s t i o n s and misunderstandings on MFCA, based on t h e knowledge which he has i n common and on h i s e x p e r i e n c e s i n Japan.
As mentioned e a r l i e r , w i t h r e f e r e n c e t o t h e p o i n t s i n d i c a t e d by P r o f . M i y a z a k i ( 2 0 0 3 ) , i n c l u d i n g some major q u e s t i o n s on MFCA, t h e author does n o t i n t e n d t o answer t o t h e p e r s o n a l o p i n i o n expressed by P r o f . M i y a z a k i , b u t i n s t e a d w i l l respond t o t h e p o i n t s which seem t o be g e n e r a l and i m p o r t a n t .
P o i n t 1 : On the purposes o f c o s t accounting i n MFCA.
F i r s t o f a l l t h i s p o i n t r a i s e s a q u e s t i o n whether o r n o t MFCA i s a b l e t o perform m u l t i p l e f u n c t i o n s ( p u r p o s e s ) t o be p l a y e d r o l e s by an i n s t i t u t i o n a l ( t r a d i t i o n a l ) c o s t accounting s y s t e m .
However, r e g a r d i n g t h i s p o i n t o f whether o r n o t an i n s t i t u t i o n a l c o s t a c c o u n t i n g system i t s e l f performs ( o r i s a b l e t o p e r f o r m ) m u l t i p l e p u r p o s e s , i
t
has been widely d i s c u s s e d and s t u d i e d i n Japan a s w e l l as a b r o a d , b u t remains t o be s o l v e d . T h e r e f o r e , i t seems t o be i n a p p r o p r i a t e t o pose such a q u e s t i o n from t h i s p o i n t o f v i e w . F u r t h e r m o r e , a s t h e s a y i n g o f " d i f f e r e n t c o s t s f o r d i f f e r e n t p u r p o s e s " , i t has been p o i n t e d o u t 9 t h a t , t o perform mul‑
t i p l e purposes u s i n g o n l y one c o s t a c c o u n t i n g method which i s an i n s t i t u ‑
t i o n a l c o s t accounting s y s t e m , and i t can be s a i d t h a t MFCA does n o t need
t o adapt t o a l l t h e p u r p o s e s . On t h e o t h e r hand, i t goes without s a y i n g t h a t ,
i n s t e a d o f r e g a r d i n g MFCA as one simple c o s t a c c o u n t i n g method, s i n c e i t
7
can be c o n s t r u c t e d as an environmental management a c c o u n t i n g i n f o r m a ‑ t i o n system having d e t a i l e d p h y s i c a l i n f o r m a t i o n as w e l l a s d e t a i l e d mone‑
t a r y i n f o r m a t i o n as b a s i c i n f o r m a t i o n ( d a t a b a s e ) , an accomplished MFCA system i s capable t o address t o v a r i o u s p u r p o s e s .
Another q u e s t i o n i s t h a t , a s e a r l i e r e x p l a i n e d , s i n c e MFCA v a l u a t e s on an e q u a l b a s i s t h e c o s t o f p o s i t i v e p r o d u c t s which a r e o f good q u a l i t y and t h e c o s t o f wastes which a r e n e g a t i v e p r o d u c t s , t h e c o s t o f a good q u a l i t y p r o d u c t ( s o ‑ c a l l e d p r o d u c t c o s t ) i s v a l u a t e d lower by t h e amount a l l o c a t e d t o t h e w a s t e s , compared w i t h t h e t r a d i t i o n a l c o s t a c c o u n t i n g ( a l l t h e e x ‑ penses o f i n p u t t e d o p e r a t i n g r e s o u r c e s which a r e used f o r t h e correspond‑
i n g p r o d u c t i o n a r e i n c l u d e d i n a c o s t o f a good q u a l i t y p r o d u c t ) a s shown i n F i g . 1 . T h e r e f o r e i t has been p o i n t e d out t h a t t h i s lower v a l u a t e d product c o s t ( c o s t o f a good q u a l i t y p r o d u c t ) i s n e i t h e r s u i t a b l e t o a purpose o f p r i c e d e c i s i o n ‑ m a k i n g , nor t o a purpose o f p r e p a r a t i o n o f f i n a n c i a l s t a t e ‑ ments, nor t o a purpose o f y i e l d management.
I t i s t r u e t h a t r e g a r d i n g s u i t a b i l i t y t o t h e purpose o f p r i c e d e c i s i o n ‑ m a k ‑ i n g o r t h e purpose o f p r e p a r a t i o n o f f i n a n c i a l s t a t e m e n t s , MFCA cannot be s a i d t o be a p p r o p r i a t e , i f o n l y t h e c o s t o f a good q u a l i t y product i s l o o k e d a t , b u t i t i s r a t h e r easy t o p r o v i d e t h e product c o s t i n f o r m a t i o n a s s u i t a b l e t o such purpose as i n t h e t r a d i t i o n a l c o s t a c c o u n t i n g , by making adjustment ( a d d i t i o n ) by t h e c o s t a l l o c a t e d t o t h e wastes ( m a t e r i a l l o s s ) u s i n g ERP ( E n t e r p r i s e Resource P l a n n i n g ) . 1 0 A l s o , r e g a r d i n g t h e y i e l d management, a y i e l d i s g e n e r a l l y d e f i n e d t o be a y i e l d i n t h e p h y s i c a l dimension, a c c o r d i n g t o Accounting Research O f f i c e o f Kobe U n i v e r s i t y ( 1 9 8 4 ) . F u r t h e r m o r e , as t h e p r o c e s s c o s t a c c o u n t i n g system denotes management based on t h e p h y s i c a l i n f o r m a t i o n such a s a d e p l e t e d volume i n terms o f p r o c e s s y i e l d , i t i s considered t h a t t h e p h y s i c a l i n f o r m a t i o n on such good q u a l i t y p r o d u c t s o r wastes i n MFCA w i l l be u t i l i z e d u s e f u l l y . As shown i n F i g . 3 , t h e t r a d i ‑ t i o n a l c o s t accounting should be understood t o be c o n t a i n e d i n MFCA.
P o i n t 2 : On the concept o f c o s t i n MFCA.
T h i s p o i n t i s r e l a t e d t o t h e c r i t i c a l i n d i c a t i o n t h a t a c o s t i n MFCA does n o t s a t i s f y t h e p r i n c i p l e o f matching c o s t s w i t h revenues f o r c a l c u l a t i o n o f t h e s o ‑ c a l l e d p e r i o d p r o f i t / l o s s , and t h a t a " c o s t normalcy" does n o t e x i s t .
The primary purpose o f MFCA l i e s i n r e v e a l i n g t h e e x i s t i n g c o n d i t i o n
o f r e s o u r c e p r o d u c t i v i t y showing environmental impact and p r o f i t a b i l i t y ,
i n c l u d i n g t h e c o n d i t i o n w i t h i n a p r o c e s s ( e s t a b l i s h m e n t o f t r a n s p a r e n c y
~ 疇 麟 霞 & 激 ヽ，
M a t e r i a l Flow Cost Accounting
F i g . 3 : R e l a t i o n b e t w e e n T r a d i t i o n a l C o s t A c c o u n t i n g a n d M a t e r i a l F l o w C o s t A c c o u n t i n g ( N a k a j i m a and Kokubu ( 2 0 0 2 ) , p . 7 6 )
w i t h i n a p r o c e s s ) . T h e r e f o r e , same as t h e t r a d i t i o n a l c o s t a c c o u n t i n g so c o n s t r u c t e d as t o have an o r g a n i c r e l a t i o n w i t h t h e f i n a n c i a l accounting whose primary purpose l i e s i n c a l c u l a t i o n o f a p e r i o d p r o f i t / l o s s , a presence o r no presence o f a s t a n d a r d f o r normalcy o f a c o s t which should be mere‑
l y i n c l u d e d i n t h e p r o d u c t i o n c o s t and o f t h e p r i n c i p l e o f matching c o s t s w i t h revenues cannot be s a i d t o be a problem f o r MFCA.
I n s t e a d o f t h e r e l a t i o n o f economic e f f o r t s and r e s u l t s i n t h e p r i n c i p l e
o f matching c o s t s w i t h revenues, MFCA grasps the i n p u t and output r e l a ‑
t i o n a s a n a t u r a l s c i e n t i f i c r e l a t i o n o f p h y s i c a l o r chemical a c t i o n and r e a c ‑
t i o n . However, i t has been p o i n t e d o u t t h a t what these mean by i s n o t c l e a r .
N e v e r t h e l e s s , i t should be considered t h a t , as shown i n F i g . 3 , t h e t r a d i ‑
t i o n a l c o s t a c c o u n t i n g i s i n c l u d e d i n MFCA. With the premise o f " a n a t u r a l
s c i e n t i f i c r e l a t i o n o f p h y s i c a l o r chemical a c t i o n and r e a c t i o n " i n MFCA, a
method o f a l l o c a t i n g t h e p r o d u c t i o n c o s t i n t h e corresponding p e r i o d t o t h e
c o s t o f p r o d u c t s i n process and t o t h e c o s t o f f i n i s h e d p r o d u c t s as a s u i t ‑
a b l e c o s t a c c o u n t i n g method i n a p e r i o d income statement can be s a i d t o
be a t r a d i t i o n a l c o s t a c c o u n t i n g . I n o t h e r words, i n a normal c o n d i t i o n ( n o r ‑
malcy o f c o s t ) , t h e r e a r e no o t h e r o u t p u t s than f i n i s h e d p r o d u c t s and p r o d ‑
u c t s i n process from a production process, and t o t h e s e two k i n d s o f
p r o d u c t s , t h e t r a d i t i o n a l c o s t a c c o u n t i n g has t h e premise t h a t t h e t o t a l p r o ‑
d u c t i o n c o s t o f t h e c u r r e n t p e r i o d i s a l l o c a t e d , w h i l e MFCA i s t o r e g i s t e r
and v a l u a t e p h y s i c a l l y t h i n g s as they a r e . T h e r e f o r e , i t can be s a i d t h a t t h e
i n f o r m a t i o n o f MFCA i s primary i n f o r m a t i o n showing an e x a c t and d e t a i l e d
︐
p r o d u c t i v i t y o f r e s o u r c e s .
Another q u e s t i o n has been f u r t h e r p o i n t e d o u t ( M i y a z a k i ( 2 0 0 2 ) p . 3 ) t h a t , a g a i n s t t h e a s s e r t i o n t h a t i t i s p o s s i b l e t o p r e p a r e t h e c o s t i n f o r m a t i o n s u i t a b l e t o t h e g i v e n purpose d e s c r i b e d a s a r e p l y i n P o i n t 1 by adjustment p r o c e s s i n g , such p r o c e s s i n g i s time‑consuming, u n ‑ r a t i o n a l l y r e q u i r i n g " a compromise t o t h e r e a l i t i e s " as seen i n t h e t r a d i t i o n a l c o s t a c c o u n t i n g .
The problem o f b e i n g time‑consuming can be s o l v e d by i n t r o d u c t i o n o f ERP and a c o m p u t e r ‑ s o f t . Adjustment p r o c e s s i n g i s n o t a compromise t o t h e r e a l i t i e s , b u t s i g n i f i e s a d a p t a t i o n t o each p u r p o s e . B u t , as t h e d i s c u s ‑ s i o n on a d a p t a b i l i t y t o purposes o f t h i s c o s t a c c o u n t i n g i s n o t i n t e n d e d i n t h i s p a p e r , i t w i l l be d i s c u s s e d i n another a r t i c l e . F u r t h e r m o r e , t h e f u n d a ‑ mental i s s u e o f "what c o s t accounting means i n an company" by way o f e x p e r i m e n t a l i n t r o d u c t i o n o f MFCA t o an company w i l l be f u r t h e r s t u d i e d . P o i n t 3 : On d i f f e r e n c e s between MFCA and Standard Cost Accounting
As shown i n F i g . 4 , i n t h e standard c o s t a c c o u n t i n g , a s t a n d a r d c o s t i s s e t up a s a base t o v a l u a t e t h e c o s t which has a c t u a l l y o c c u r r e d , and i t s v a r i a n c e i s t o be managed. F i r s t , a s t a n d a r d c o s t i s f i x e d t o a product u n i t
① V a r i a n c e A n a l y s i s : Amount o f Standard Cost V a r i a n c e
Amount o f Standard Cost Variance = ( A c t u a l Occurred C o s t ) ‑( S t a n d a r d C o s t )
② T o t a l V a r i a n c e o f D i r e c t M a t e r i a l Cost
Development t o P r i c e V a r i a n c e and Q u a n t i t a t i v e V a r i a n c e
A c t u a l D i r e c t M a t e r i a l Cost = Predetermined P r i c e x A c t u a l Consumption Q u a n t i t y Standard D i r e c t M a t e r i a l Cost = Standard U n i t P r i c e x Standard Consumption
Volume
③ Standard Cost
Standard Cost = ( C o s t S t a n d a r d ) x ( A c t u a l P r o d u c t i o n Volume) Cost Standard = ( P h y s i c a l S t a n d a r d ) x ( P r i c e S t a n d a r d )
( C o s t Standard means a c o s t p e r product u n i t . )
④ Cost Standard
E f f i c i e n c y L e v e l P r i c e L e v e l Volume L e v e l I d e a l Standard Cost I d e a l E f f i c i e n c y I d e a l P r i c e A c t u a l P r o d u c t i o n
C a p a c i t y
Normal Cost Normal E f f i c i e n c y Normal P r i c e Average Volume
R e a l i s t i c Standard Achievable C u r r e n t P r i c e Budget Volume Cost E f f i c i e n c y
F i g . 4 : Outline o f Standard Cost System (Hiromoto ( 1 9 9 7 ) p p . 269‑275)
so t h a t t h e v a r i a n c e between t h e s t a n d a r d c o s t and t h e a c t u a l c o s t i n t h e product c o s t i s c a l c u l a t e d , and then t h e d e t a i l s o f t h e v a r i a n c e i n t h e v a r i ‑ ance a n a l y s i s i s t o be developed and analyzed so as t o be managed by f a c ‑ t o r ( c a u s e ) . For example, concerning d i r e c t c o s t o f m a t e r i a l s , as shown i n
② o f F i g . 4 , t h e t o t a l c o s t v a r i a n c e s o f d i r e c t m a t e r i a l s a r e t o be broken down and developed i n t o t h e p r i c e v a r i a n c e and t h e q u a n t i t y v a r i a n c e .
However, t h i s q u a n t i t y v a r i a n c e a n a l y s i s i s o b t a i n e d by m u l t i p l y i n g t h e v a r i a n c e between t h e a c t u a l usage o f consumption and the standard con‑
sumption by a standard u n i t c o s t , and i s expressed and managed i n a monetary v a l u e , b u t i n r e a l i t y i t i s expected t h a t t h e q u a n t i t y v a r i a n c e w i l l be a n a l y z e d , which can be s a i d t o be an i n d i r e c t approach i n comparison w i t h t h e method o f MFCA. Furthermore, as mentioned i n t h e f o l l o w i n g , a q u a n t i t y v a r i a n c e v a r i e s w i t h a f i x e d s t a n d a r d u s a g e . I n MFCA, a q u a n t i t y v a r i a n c e corresponds t o t h e q u a n t i t y which d i d n o t produce q u a l i t y p r o d ‑ u c t s among the a c t u a l consumption, but t h e o r e t i c a l l y i s n o t t h e v a r i a n c e w i t h t h e standard u s a g e . 1 1
I n t h i s c o n n e c t i o n , as MFCA r e q u i r e s t h e same s t r i c t n e s s i n a s t a n d a r d c o s t o f m a t e r i a l s as i n an i d e a l s t a n d a r d c o s t d e f i n e d i n t h e s t a n d a r d c o s t a c c o u n t i n g , i t has been p o i n t e d out whether or not MFCA i s p r a c t i c a l l y e q u a l t o t h e s t a n d a r d c o s t a c c o u n t i n g .
To begin w i t h , MFCA seeks t o s t r i c t l y grasp t h e volume o f m a t e r i a l s o f a l l i n p u t t e d and o u t p u t t e d substances w i t h i n a p r o c e s s , as r e p r e s e n t e d i n a mass b a l a n c e . MFCA i s d i f f e r e n t i n t h a t i t does n o t f i x a c o s t s t a n d a r d as i n t h e standard c o s t a c c o u n t i n g , b u t d i r e c t l y l o o k s a t t h e volume o f m a t e r i a l s . Moreover, the o b j e c t i v e o f such grasping i s n o t f o r f i x i n g a s t a n d a r d , b u t f o r s c i e n t i f i c a l l y and a c c u r a t e l y g r a s p i n g t h e a c t u a l c o n d i t i o n t o be e n t e r e d c l e a r l y .
C e r t a i n l y , s i n c e t h e m a t e r i a l l o s s ( w a s t e o r e m i s s i o n ) i s grasped i n
MFCA, i n which, based on i t s volume, the c o s t i s v a l u a t e d and i d e a l l y t h e
m a t e r i a l l o s s i s aimed t o r e a c h z e r o , t h e t o t a l amount o f such c o s t i s r e c o g ‑
n i z e d as t h e amount o f l o s s ( w a s t e ) . I f t h e t o t a l amount o f such c o s t i s
e q u a l t o a v a r i a n c e between t h e s t a n d a r d c o s t i n t h e s t a n d a r d c o s t a c c o u n t ‑
i n g and t h e a c t u a l c o s t , then i t may seem a l i k e . As shown i n ③ o f F i g . 4 ,
t h e c o s t standard i n t h e s t a n d a r d c o s t i s e q u a l t o t h e p h y s i c a l s t a n d a r d
m u l t i p l i e d by t h e p r i c e s t a n d a r d , and as shown i n ④ o f F i g . 4 , t h e c o s t s t a n ‑
dards o f t h r e e l e v e l s o f i d e a l , normal and achievable volumes are s a i d t o
be a b l e t o be f i x e d . An i d e a l c o s t s t a n d a r d means t o s e t up as a s t a n d a r d
1 1
t h e very i d e a l c o n d i t i o n t o be f i x e d based on a s c i e n t i f i c a n a l y s i s . I t has been p o i n t e d out t h a t t h e v a r i a n c e between t h i s i d e a l s t a n d a r d and the a c t u a l one may be e q u a l t o t h e m a t e r i a l l o s s , e s p e c i a l l y r e l a t e d t o m a t e r i a l s . I n MFCA, u n l e s s i n p u t t e d m a t e r i a l s 100% produce q u a l i t y p r o d u c t s a s a r e s u l t o f p r o d u c t i o n , m a t e r i a l l o s s which should be e n t e r e d a s m a t e r i a l l o s s e x i s t s . T h e r e f o r e , from a s t a n d a r d c o s t a c c o u n t i n g v i e w p o i n t , t o make t h i s m a t e r i a l l o s s z e r o can be i n t e r p r e t e d a s i f i t would be an " i d e a l " o b j e c t i v e i n MFCA. However, although t h i s " i d e a l " i n s t a n d a r d c o s t a c c o u n t i n g i s a l ‑ ready known t o be i m p o s s i b l e , such i n t e r p r e t a t i o n as " i f an u l t i m a t e dream i s assumed t o become r e a l i z e d " i s i n c l u d e d . I r r e s p e c t i v e o f such i n t e r p r e t a ‑ t i o n , MFCA i n t e n d s t o p r o v i d e i n f o r m a t i o n from a viewpoint o f r e s o u r c e p r o d u c t i v i t y . Based on an improvement p l a n on how t o reduce t h e m a t e r i a l l o s s c o n t a i n e d i n t h e flow o f wastes and e m i s s i o n s , i n s p i t e o f t h e raw m a t e r i a l s which a r e a b l e t o c o n s t i t u t e q u a l i t y p r o d u c t s , a c o s t b e n e f i t a n a l y s i s should be conducted f o r judgment and e x e c u t i o n , which i s the o b j e c t i v e o f i n t r o d u c t i o n o f MFCA, and a t t h e same time t h e volume (mon‑
e t a r y amount) o f r e d u c t i o n t o be f i x e d ( o r e x p e c t e d ) i s a l s o i t s o b j e c t i v e . F u r t h e r m o r e , i t has been p o i n t e d o u t t h a t a standard c o s t a c c o u n t i n g n o t d i s r e g a r d i n g normal s h r i n k a g e c o s t may be i d e n t i c a l w i t h MFCA.
When, t o say n o t h i n g o f abnormal s h r i n k a g e ( s p o i l a g e ) , normal s h r i n k a g e ( s p o i l a g e ) without being i n c l u d e d i n t o a product c o s t i s g r a s p e d , i t i s n e c e s ‑ s a r y t o d e f i n e what s h r i n k a g e o r s p o i l a g e s t a n d s f o r . For i n s t a n c e , i t has been e x p l a i n e d as " a c c r u a l o f d e f e c t i v e p r o d u c t s i n a j o b process o r l o s s o f m a t e r i a l s " . 1 2 And as a t r e a t i n g method o f s h r i n k a g e o r s p o i l a g e i n t h e c o s t a c c o u n t i n g , t h e r e a r e g e n e r a l l y two e x p l a n a t i o n s , i . e . t h e one o f a l l o c a t i n g t h e p r o d u c t i o n c o s t t o b o t h f i n i s h e d p r o d u c t s and products i n p r o c e s s a t end o f f i s c a l y e a r , d i s r e g a r d i n g a c c r u a l o f s h r i n k a g e o r s p o i l a g e and an‑
o t h e r one o f a l l o c a t i n g t h e p r o d u c t i o n c o s t t o b o t h f i n i s h e d p r o d u c t s and p r o d u c t s i n process a t end o f f i s c a l y e a r , n o t d i s r e g a r d i n g a c c r u a l o f s h r i n k ‑ age o r s p o i l a g e . However, i n such c a s e , c o s t a t t r i b u t e o f s h r i n k a g e o r s p o i l a g e and a t r e a t m e n t method based on presence o f such c o s t a t t r i b u t e and a l s o e a s i n e s s o f t h i s t r e a t m e n t method have been d i s p u t e d .
Another a s p e c t o f t h e problem i s t h a t , when a t t e n t i o n i s p a i d t o l o s s o f
m a t e r i a l s , t h e c o n t e n t o f t h e problem d i f f e r s l a r g e l y i f t h e l o s s i s grasped i n
r e a l i t y o n l y f o r d i r e c t m a t e r i a l s o r i f t h e l o s s i s grasped f o r a l l m a t e r i a l s as
i n MFCA. I n t h e o p i n i o n o f t h e a u t h o r , g e n e r a l l y , l o s s o f o n l y d i r e c t m a t e r i ‑
a l s i s grasped i n p r a c t i c a l b u s i n e s s and i t i s very seldom t h a t normal
s h r i n k a g e o r s p o i l a g e i s grasped i n t h e c o s t a c c o u n t i n g , e x c e p t , however, t h a t q u a n t i t a t i v e i n f o r m a t i o n on s h r i n k a g e o r s p o i l a g e under a normal or s t a n d a r d p r o d u c t i o n c o n d i t i o n may be obtained f o r p r o d u c t i o n c o n t r o l .
T h e r e f o r e , i f t h e e x i s t i n g i n f o r m a t i o n on p r o d u c t i o n c o n t r o l w i t h r e g a r d t o t h e m a t e r i a l l o s s which i s a p a r t o f m a t e r i a l s b e i n g unable t o produce q u a l i t y p r o d u c t s i s f u l l y c o v e r e d , i t may g i v e an impression t h a t g r a s p i n g i s made s u f f i c i e n t l y . However, f o r example the m a t e r i a l l o s s i n f o r m a t i o n , as shown i n F i g . 5 , i s n o t grasped a t a l l . The m a t e r i a l l o s s i s f i r s t d i f f e r e n t i a t e d i n t o a r e c y c l e p a r t and a f i n a l waste p a r t a s a m a t e r i a l l o s s means, f o r i n s t a n c e , a p a r t o f m a t e r i a l s which i s n o t o u t p u t t e d a s q u a l i t y products i n t h e one‑time processing p r o c e s s . Both o f them a r e composed o f t h e mate‑
r i a l s making up products ( q u a l i t y p r o d u c t s ) and t h e m a t e r i a l s necessary f o r p r o d u c t i o n , b u t n o t making up the components of products. Therefore, MFCA grasps the m a t e r i a l f l o w , beyond treatment o f s h r i n k a g e o r s p o i l a g e depending on the presence o r no presence o f c o s t a t t r i b u t e s . Furthermore, a s t h e r e c y c l e p a r t which i s g e n e r a l l y n o t regarded as normal shrinkage i s a l s o once grasped as m a t e r i a l l o s s i n MFCA, a go‑through r a t e 1 3 i n a s t r i c t sense o f t h e word can be o b t a i n e d .
I f t h e normal shrinkage ( s p o i l a g e ) i s t h e o r e t i c a l l y grasped and i t s c o s t i s valued as i n MFCA, then the c o s t a c c o u n t i n g n o t d i s r e g a r d i n g normal s h r i n k a g e c o s t , e t c . and MFCA may resemble each o t h e r . However, the r e a s o n why i t i s necessary t o s e p a r a t e and grasp t h e normal shrinkage ( s p o i l a g e ) i s n o t s u f f i c i e n t l y e x p l a i n e d f o r p r a c t i c a l b u s i n e s s , and f u r t h e r ‑ more such explanation i s considered t o be u n n e c e s s a r y . T h e r e f o r e , i t seems t o be extremely r a r e t h a t a company executes the cost accounting which does n o t d i s r e g a r d normal shrinkage c o s t s , e t c .
M a t e r i a l Loss
P a r t s of Recycle P a r t s o f Waste : M a t e r i a l s able t o compose goods
亡
J : M a t e r i a l s necessary f o r producing goods except 回 ．
F i g . 5 : Composition o f M a t e r i a l Loss
13
Even though t h e c o s t accounting which does n o t d i s r e g a r d normal s h r i n k a g e c o s t s , e t c . comes c l o s e r t o ( r e s e m b l e s ) MFCA, MFCA does not need a t a l l t o adopt a c o s t a c c o u n t i n g which d i s r e g a r d normal s h r i n k a g e c o s t s , e t c . As seen a b o v e , i t i s p o s s i b l e t o make a comparison w i t h t h e t r a ‑ d i t i o n a l c o s t a c c o u n t i n g , b u t i t can be s a i d t h a t i t i s i m p o s s i b l e t o i n c l u d e MFCA i n t o t h e t r a d i t i o n a l c o s t a c c o u n t i n g .
I n t h i s a r t i c l e t h e author i s unable t o address t o a l l t h e q u e s t i o n s . A c c o r d i n g l y i t w i l l be d e s c r i b e d below b r i e f l y t h e d i f f e r e n c e s i n process of c a l c u l a t i o n between t h e s t a n d a r d c o s t a c c o u n t i n g and MFCA.
① The s t a n d a r d c o s t a c c o u n t i n g pays a t t e n t i o n t o t h e computation and treatment o f v a r i a n c e s i n a product c o s t , w h i l e MFCA r e g a r d s v a r i a n c e s between t h e i n p u t t e d volume and t h e o u t p u t o f q u a l i t y products as the m a t e r i a l l o s s .
② I n r e s p e c t o f m a t e r i a l c o s t , a method o f g r a s p i n g consumption volumes v a r i e s d i r e c t m a t e r i a l o r i n d i r e c t m a t e r i a l i n t h e s t a n d a r d c o s t a c c o u n t ‑ i n g , w h i l e m a t e r i a l s a r e a l l grasped a c c u r a t e l y , based on mass balance i n MFCA.
③ Standard c o s t i s c a l c u l a t e d , based on t h e a c t u a l p r o d u c t i o n volume, w h i l e a product c o s t i s developed, based on t h e i n p u t volume and the output volume ( q u a l i t y p r o d u c t s and m a t e r i a l l o s s ) i n MFCA.
④ I n t h e s t a n d a r d c o s t a c c o u n t i n g , s e t t i n g a c o s t s t a n d a r d means s e t t i n g a s t a n d a r d c o s t which i s a base f o r c o n t r o l . B u t , a s c l e a r l y shown i n F i g . 4 , t h i s c o s t s t a n d a r d i s i n t e g r a t e d w i t h a monetary v a l u e so as t o make a p r i c e s t a n d a r d a c a l c u l a t i o n f a c t o r . On t h e c o n t r a r y , i n t h e MFCA, a flow c h a r t t o be prepared a t t h e end o f t h e a d o p t i o n o f MFCA i s a c h a r t
based on t h e monetary u n i t s ( c o s t s i n s c r i b e d ) , and a t t h i s o c c a s i o n , the volume o f m a t e r i a l s and c o s t s a r e f o r t h e f i r s t time i n t e g r a t e d . The i n t e ‑ g r a t i o n w i t h c o s t s i n MFCA i n d i c a t e s a magnitude o f m a t e r i a l l o s s i n t h e monetary v a l u e , and t h e o b j e c t o f c o n t r o l i s t h e volume o f m a t e r i a l s . I f a b r i e f e x p l a n a t i o n on t h e above‑mentioned ④ i s added, when we l o o k a t t h e r e l a t i o n e q u a t i o n o f "Volume o f M a t e r i a l s x Volume of M a t e r i a l s = Volume o f M a t e r i a l s " and t h e r e l a t i o n e q u a t i o n o f "Volume of M a t e r i a l s x Monetary Value = Monetary V a l u e " , b o t h o f these equations may be m i s t a k e n l y u n d e r s t o o d , a t f i r s t s i g h t , a s a p h y s i c a l c o n t r o l i n f o r m a ‑ t i o n 1 4 because t h e volume o f m a t e r i a l s c o n s t i t u t e s a f a c t o r . However, i f the
‑ ‑‑‑‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑‑ I
