Both the “profit before allocating head-office or corporate cost” and the “profit after allocating head-office or corporate cost” are used to evaluate a divisional manager’s performance. From the existing literature, it is found that the “profit before allocating head-office or corporate cost” is used to evaluate a divisional manager’s performance. However, in the actual practice of Japanese companies it is seen in the majority of cases that divisional managers are evaluated by the “profit after allocating corporate cost.” This paper examines the relationship between profit evaluation measures for the divisional manager and the efficiency of capital, and clarifies why such practice is undertaken in Japan. The author has conducted a questionnaire survey of all listed companies in the first section of the Tokyo stock exchange in October 1997, and analyzed the resulting data with a log-linear model. The results suggest that using the “profit after allocating corporate cost” for evaluating divisional managers is effective in improving financial performance (i.e. turnover of total capital and ROI improve).

It is necessary to establish the price of a new product-with regards to its “quality corresponding to price” or in other words, its price performance-at the same level or higher when contrasting it with similar products that are not very different in price. I will first discuss this theory. In this theory, the thinking of quality deployment is essential. The total manufactured cost of a new product is to be an α percent of an established sale price (for example, about 70%) determined by the above method. When putting a new product out into a mature market, there is the issue of prior decision making with regards to market-oriented pricing and its product conception. The product design and target costing need to be in concordance with the above mentioned decision. Next, with regards to target costing for the above total manufactured cost, with the use of VA (Value Analysis) technique, cost reduction can be implemented based on the design change of existing parts and so on. VA is the core technology behind target costing. This is based on the same principle as the above product’s pricing theory (this technique is called QDm in this paper). There is a technique resembling VA called VE (Value Engineering). There are many publications on VA/VE by researchers involved in management accounting. However, the VE equation differs completely from the thinking behind VA and this needs to be taken into consideration.

This paper proposes an estimation method of the demand function (the relation between price and demand) for a new product by customers’ evaluations to obtain the basic information with regard to the customer- oriented pricing for the product. There have been many studies for the estimation of the demand function. However, in the studies so far, the demand functions have derived from the curve fitting method to the actual results. It is impossible to estimate the demand function of the new product based on such a method. By the way, there exist features that the monetary values by customers’ evaluations are full of inconsistent uncertainties with large variances among the evaluators. First, in this study, the evaluated monetary values with these features will be adjusted based on the correlations between the performance levels of product functions, then the relationship between price and purchasing desire (purchasing probability) will be drawn out of each customer. Second, the relationship between the price and the distribution of the purchasing rate is derived from the above mentioned relationships for the individual customers, then the demand function of the new product will be estimated based on the proposed result. Furthermore, the representative value as an index of the customer- oriented pricing will be calculated from the estimated demand function. Finally, the proposed method in this study is applied to new types of kitchen furniture to examine the validity of the method.

The purpose of this paper is (1) to examine the validity of three existing methods of measuring sales with leaseback transactions, and (2) to propose valid methods of measuring sales with leaseback transactions. Sales with leaseback transactions are designed to protect related parties when contracts are developed. Therefore, the purpose of a sale with a leaseback transaction determines the economic substance of the transaction. There are three classifications of sales with leaseback transactions. They are based on the following differences in the economic substance of the transactions; (1) mortgages involving borrowing by transfer; (2) purchase and sale transactions connected with an operating lease transaction, which does not need to be originally connected with them, and; (3) raising money by selling a lessee’s property at the highest possible price. Accordingly, a valid method of measuring sales with leaseback transactions is appropriate to reflect differences in the economic substance of each transaction.

Continuous improvement in companies is not only to strive to avoid waste for the sake of the best in the total, but also to secure the flexibility which is needed to realize customer satisfaction. In the meantime, effective management of companies’ capacity and redefinitions of capacity is essential to maintain a competitive advantage that is durable in international and competitive circumstances. It is necessary that the definition of capacity that companies select should include the structure that pursues continuous improvement. Profit that is brought to companies is determined by a trade-off between contribution margin of each product and service and costs except for those of variable products. The standards of capacity utilization that companies select for realization of the greatest profit need to agree with the most efficient trade-off. Therefore the capacity idea to be selected should be based on optimal capacity utilization that has the mechanism for maintenance of durability and flexibility.