In the 1960’s, the Japanese car manufacturer Toyota developed target costing – a management accounting model that reduces the risk of releasing unprofitable products. The method eventually spread to Swedish firms.

The study starts by summing recent previous research on target costing in Sweden (full description of these studies is available in Appendix I). Looking at this research, it is noted that there is an inconsistency with regards to what principles of target costing are used, and which are not. It is also noted that some firms are claimed to be used target costing and some firms are claimed not to be using it. No study, however, has tried to find an explanation to why some principles are implemented and why some are not. This is also the theoretical contribution of this thesis.

More specifically, the research problems are therefore: (1) is target costing really implemented in a different way in Sweden as compared to Japan and (2), if so, why are there differences? It is further assumed that ideology could be a good explaining variable for the possible differences in implementation.

In answering the first question, target costing is firstly described according to well-known books and articles on the subject. Following normative description, a presentation is made how target costing has been employed in Sweden. Secondary data based on three quantative studies is used here. These two descriptions are then contrasted against each other and it is found that target costing is implemented in a different way as compared to normative Japanese literature.

Next, the second question is answered by constructing a theoretical framework based on ideological- and managerial assumptions of Japan and Sweden, respectively. This framework is then used to try to explain the differences mentioned above. Through the analysis it is observed that the Swedes’ lower priority of financial goal as well as their orientation towards the future are often used to explain the differences. These two aspects are also two of the main differences between Swedish and Japanese ideologies.

It is therefore concluded that the differences might be explained using ideological assumptions, although there are probably other important factors as well. An implication of the result is that it is questionable whether target costing even will reach popularity in Sweden. Finally, it is also concluded that Likert-scales are not usefil when measuring target costing implementation