1. The origin of this statistic is difficult to identify but it appears to derive from B.S. Blanchard, “Design and Manage to Life Cycle Cost” (Portland, Oregon: M/A Press, 1978).
2. R.S. Kaplan and A.A. Atkinson, “Advanced Management Accounting,” 3rd ed. (Upper Saddle River, NJ: Prentice Hall, 1998), 223; and C.T. Horngren, S.M. Datar and G. Foster, “Cost Accounting: A Managerial Emphasis,” 11th ed. (Upper Saddle River, New Jersey: Prentice Hall, 2002), 417–418.
3. R.H. Garrison and E.W. Noreen, “Managerial Accounting,” 9th ed. (Chicago: Irwin McGraw Hill, 2000), 814.
4. See, for example, J.M. Brausch, “Beyond ABC: Target Costing for Profit Enhancement,” Management Accounting 76 (November 1994): 45–49; R. Henkoff, “New Management Secrets From Japan — Really,” Fortune, Nov. 27, 1995, 135–146; G. Böer and J. Ettlie, “Target Costing Can Boost Your Bottom Line,” Strategic Finance 81 (July 1999): 49–52; G. Schmelze, R. Geier and T.E. Buttross, “Target Costing at ITT Automotive,” Management Accounting 78 (December 1996): 26–30; J.H. Hertenstein and M.B. Platt, “Why Product Development Teams Need Management Accountants,” Management Accounting 79 (April 1998): 50–55; and S. Ottosson, “Dynamic Product Development —DPD,” Technovation 24 (March 2004): 207–217.
5. For a thorough description of target costing, see R. Cooper and R. Slagmulder, “Target Costing and Value Engineering” (Portland, Oregon: Productivity Press, 1997).
6. Other firms have introduced similar systems for the same reason. For example, Kirin Brewery Company, Ltd. used its Kyoto Brewery System and Higashimaru Shoyu Co. Ltd., a soy sauce manufacturer in Japan, introduced its price control system to motivate cost reductions in their production processes; see R. Cooper, “When Lean Enterprises Collide: Competing Through Confrontation” (Boston: Harvard Business School Press, 1995).
7. P.N. Khandwalla, “The Effect of Different Types of Competition on the Use of Management Controls,” Journal of Accounting Research 10 (autumn 1972): 275–285.
8. R.S. Kaplan and R. Cooper, “Cost and Effect: Using Integrated Cost Systems To Drive Profitability and Performance” (Boston: Harvard Business School Press, 1997).
10. Y. Monden, “Cost Reduction Systems: Target Costing and Kaizen Costing” (Portland, Oregon: Productivity Press, 1995); and R.S. Kaplan and A.A. Atkinson, “Advanced Management Accounting,” 3rd ed. (Upper Saddle River, New Jersey: Prentice Hall, 1998).