system is used by companies worldwide. A comparative
study of cost accounting practices found that
three-fourth of the companies surveyed in the United
Kingdom, two-third of the companies surveyed in
Canada, and 40% of the companies in Japan used
standard costing system.
Standard costs were
first introduced in Japan after World War II, with
Nippon Electronic Companies (NEC) being one of the
first Japanese companies to adopt standard costs for
all of its products. Many other Japanese companies
followed NEC's lead and developed standard cost
The ways in which
these standard costs are used in Japan and also in
other countries are shown below:
planning and control**
numbers 1 through 4 denote importance of
use, from greatest to least.
Source: Compiled from data in study by
Shin'ichi Inoue, "Comparative Studies of
Recent Development of Cost Management
Problems in U.S.A., U.K., Canada, and
Japan," Research Paper No. 29, Kagawa
University, p. 20.
Over time the
pattern of use shown above may change, but at
present managers can expect to encounter standard
costs in most industrialized nations. Moreover, the
most important uses are for cost management and
budgetary planning purposes.