A Study On Activity-Based Costing And Its Application

Under macro-background of the rapid development of science and technology, quick change of economic conditions, increasingly drastic competition around the world, the Activity-Based Costing had gotten great development in the western developed countries, meanwhile, the research and application of ABC had launched step by step in our country also. ABC overcomes the distortion of accounting information, which is brought on by the inconsequent distribution of indirect expense in traditional cost management, thereby, it can bring the true and external financial information for the decision-making of business management of an enterprise, meanwhile, it can help an enterprise implement activity rebuild through the analysis of value-added or non value-added with the activity as object, to realize the continuous improvement of an enterprise and finally reach the goal of enterprise value increase. With the wide use for reference to the research of ABC theories and literatures ,at home and abroad, this paper absorbed the advanced experience and achievements of the activity-based cost control, had a discussion, analysis, and study for the theory and application of ABC, then had it applied to practice. The paper begins with an introduction to the genesis and development of ABC, the related concept and calculation of ABC, also, the evolvement and development of the ABC calculation model. Regarding the cost driver, which is the core concept of ABC, this paper here expatiates on the analysis, selection, and its combination theory and method in detail. Then, the paper has a systematic analysis and discussion for the theoretical basis and operation frame of activity-based cost control, the contents of activity-based cost control, the comparison with the traditional cost control, and the functional extension of activity-based cost control. Finally, in the case study of the ABC application in MOTOROLA ESG Tj plant, it is deduced how the logic of ABC is applied to analysis and control of cost flow. Through the applicability and feasibility study of ABC theory, it could be concluded from this paper: activity-based cost control is an advisable model of cost control, which accords with the advanced manufacturing environment, although, the conditions for the popularization andapplication of ABC in our country is immature, but the application trend of ABC is evident. By that, this paper makes every effort to make people have a comparatively intact understanding to ABC, hoping that the administrator of enterprises could pay more attention to ABC, improve the implementation of ABC in our country, and to realize the competitive cost advantages of enterprises.