The Application Of Activity-based Costing In The Textile Manufacturing Industry

Traditional cost accounting methods are emphasized in the measurement and control about the direct cost such as materials and labor cost, rather than the allocation about the indirect cost. With the rapid development of information technology and the increasingly fierce market competition, coupled with the great change of business management philosophy and style, the indirect costs have been a substantially increasing in the proportion of the cost of enterprise products. And the cost information gained by traditional cost accounting methods is becoming more and more inaccurate. therefore, a new cost measure method---activity-based cost accounting was being produced.Activity-based costing accounting is a new cost calculation method, which concentrates on the basic unit of production--activity, and takes "activity" as a standard to distribute indirect costs. It makes cost calculating more accurate. Activity-based costing derives from the developed countries, has been used in their industries for a long time, the theory was introduced to China is starting from the 90's, after 10 years of research, we have made great progress in theory and practice. At the same time, some companies begin to use it.In recent years, it is the exchange rate reform and labor costs increasing,coupled with the other factors that together determine the decline of advantages in the manufacturing field, which induce the industrial structure adjustment and economic development ways becoming increasing urgent. In this context, the textile manufacturing enterprises, on one hand, accelerate the pace of mergers and restructuring, and on the other hand, textile enterprises are also increasingly tend to rely on advanced technology and machinery to replace laboring workers. Because of this new changes in the textile industry, we think that the applications of ABCs in the textile manufacturing industries is urgent and possible after our investigations. In this paper, we point out the necessity and feasibility of the application of ABCs in the textile manufacturing industries, and take YC textile company for example to express the procedure of the application of ABC in textile manufacturing industry and how to use it. There are five chapters in this paper, and the content is as follows:The first chapter gives a clear and concise introduction of Activity—based costing theory, and it focuses on the origin and development of activity—based costing and the basic conceptions and accounting principles and methods. The second chapter gives a detailed analysis about the cost control characteristics and limitations of traditional costing calculating ways in the textile manufacturing companies, and point out the feasibility and necessity of the applications of ABCs in textile manufacturing enterprises.The third chapter points out the procedure of the application of ABC in textile manufacturing industry on the basic principles of ABCs, and coupled with the production characters of textile manufacturing companiesChapter IV takes YC textile manufacturing industry as an example and gives the general procedures of the application of ABCs. Through analyzing on the current situation of cost calculating in YC textile manufacturing industry, It proposes the general procedures of the application of ABCs.Chapter V points out the general conclusions and the main experience. According to this case, we gives some suggestion on the improvement of the application of ABC in the textile manufacturing industries.