Research On Application And Innovation Of ABC In Chinese Manufacturing Industry

In practice of cost management, Managers always neglect cost accounting method, while they give much attention to process of providing products and controlling sorts of expense. Most manufacturers are still using the traditional way of accounting in china. Traditional cost accounting models assign indirect costs to different products on sole standard such as man-hour or salary. It doesn't tally with fair-assignment principle and information-relevance principle. It can't equip managers with "true" cost intelligence to drive improvements.With the development of enterprise itself, changes of cost proportion of produces made traditional cost accounting models unsuitable. At the same time, in order to survive, many manufacturing industries have to select products multiplication because of intense competition. The accuracy of cost is very important for managers when they make decision. So the ABC is introduced to china gradually. ABC has been proved better than traditional cost accounting method but widely application is rare. Based on former researchers' efforts on ABC, in this paper we point out the advantages of ABC by comparing ABC with traditional cost accounting. Relating the reality of our manufacturing industry, the paper analyzes reasons of hindering ABC from widely application, that is, too many cost drivers make ABC distally cost-benefit principle. In view of the fact, the paper studies cost driver theory and method in order to promote ABC in our manufacturing industry.