Prologue

Problems in My Company’s Management Accounting       

   I was born in 1941 and I live in Japan. I majored in civil engineering at the University of Tokyo. I began my career with the Japan Highway Public Corporation. Several years later, I changed jobs and began working for the Honshu Shikoku Bridge Authority. With this Authority, I engaged in ordinal technical jobs including project cost estimations for the mainland- Shikoku island route, ordering jobs for construction works, inspecting jobs for them, establishing technical specifications for suspension bridge structures and so forth.  

    Whilst working for the Authority, I studied structural theories of suspension bridges and wrote several papers in the "Transactions of Japanese Society of Civil Engineering".  I undertook a Ph. D for these studies at the University of Tokyo. I participated in the all Honshu-Shikoku suspension bridge planning, design and construction. I have no experience of a researcher profession through the workings.

   At the end of 1979, I returned to my city of origin in the Tohoku region. I entered my family's construction company at the beginning of 1980.

   I worked in roles across the whole company. My project-collaborators and I developed the new "COME Post and Beam Method", for  wooden housing structures, creating an airtight design. We developed the "Angle C Method", a new method of injecting cement slurry into concrete cracks, effective from 0.1 mm up in deteriorated concrete structures. We were awarded Japanese and international patents.

    I am now the president of the company, employing about 150 employees of whom nearly half are field workers (2003). I have experienced both favorable and unfavorable businesses conditions. I am now bearing up under the current adverse business conditions of Japanese deflationary depression.

    For years I have encountered management accounting difficulties. One such problem is the mechanism of an income statement. It is not easy to understand, so I have encountered difficulties in explaining the meaning of profit to any employees. In retrospect, the reason has been the existence of inventories, which contain manufacturing overhead applied. The main manufacturing overhead costs in my company are the labor costs of supervising construction engineers. Engineers engage in one main project and several small projects at the same time, both individually and jointly. It is impossible to distribute a supervisor’s daily labor-cost between several projects accurately. 

   The second problem is that it looks like construction costs managed as the targeted costs in field sites are different from the construction costs on income statements. As a result, both gross profits ( operating profit is allowable) differ.

   The third problem is the lack of a graph to relate the current profit conditions to the employees in departmental and overall company accounting. I wanted to have this information constantly available over the company's IT network.  

   I bought some cost accounting textbooks including a handbook of accounting. I knew that the means of accounting adopted by my company was absorption costing. The way of cost accounting described in such books was ineffective for my company’s means of management accounting. The gross profit defined in textbooks, or the gross profit in an income statement, was different from the profit  which was targeted in the construction-worksites of my company. I later named the worksites gross profit "Managed Gross Profit" by me. One profit chart used in textbooks is the "Break-even chart" in direct costing. However, my company has not adopted direct costing.

   There was no theory to solve these problems so I therefore approached this myself. 

   One day in Oct. 1995, I suddenly thought, "Can I apply a Taylor series expansion to a function of  manufacturing-overhead-applied on a final statement about a forecasted statement with respect to final sales?" I used this method for a non-linear cable displacement analysis. I derived a new profit chart which takes into consideration inventories and is applicable to actual businesses. My finding was different from the chart and formula presented in accounting textbooks( as I later discovered). The result is shown in this website.

Economics

    After finishing  'Accounting'  Section of this website, in September 2003, I began to apply my accounting theory to the input-output table in the national economic accounts. I found there a never-before-seen chart which had a variable cost ratio relating to the input-output table data. The chart was different from that which explains the Keynesian multiplier effect written in any textbook relating to economics. My chart was unrelated to the consumption function and the marginal propensity to consume. Then, I found that Keynes's investment multiplier effect formula was in fact wrong. The rest is in the following.

Theory of living beings activities 

Since birth I have suffered with a physical condition, caused by an autonomic imbalance, for which Western medicine has no answer. Thus, for the past forty years, I have been studying Oriental medicine in search of a cure. Through this study, I have found a pattern which holds true for all beings, from single-celled to complex organisms. A living organism comes to the world; gets its food (nutrients) from the outside; has contact with others; digests the food and grows; enhances its own energy efficiency; reproduces, ages and dies. In this process, there are values to live by and media which carry them. On the basis of my studies I have developed a theory frameworking the actions of living beings.

  Perhaps by chance, or perhaps inevitably, due to the need for good business administration, I developed an effective way of demonstrating business activity structure (The Managed Gross Profit Chart Theory). Ultimately, the actions of both the human body and soul are surely the result of the cells own operation in the cellular tissue and their functions. The actions of living beings therefore follow the way in which the cells act. The living beings activities created the composition of the atmosphere and even a considerable part of the natural environment. This theory then, will encompass not only business activities, but also all other human behavior, be it in politics, economics, culture or even conflict. Will it not, furthermore, shape the global environment, also?

 All human activity must be compiled in the Input Output Table, to be applicable in much the same way as in economic research. Application of my hypothesis to the IO table analysis is the start of my economic research. It is followed by J.M.Keynes, L.Walras, J.Shumpeter, W.W. Leontief and my final theories.

 In attempting to conform the hypothesis to existing economic theories, revisions and additions have been and continue to be required. Accordingly, it can not be fully described here, thus rendering the explanation of my most recent economic theory somewhat difficult. The most difficult issue however, is building financial credit into the hypothesis. Credit was born of words (foresight and prediction) and grown by human wisdom (confirmation and acknowledgement) for long years. It is a standard fortified through history for human to live in societies. This concept of the financial credit is a major feature of the distinction between human and other living beings. This theory will surely be able to not only help cure humans of disease, but also relieve society of its ills. Please just wait a little longer. 

Dec. 2003 Yuichiro Hayashi, http://www11.plala.or.jp/yuichiro-h/