The Research On Activity Based Standard Cost Management System Ofbayer Material Science

The concept of activity based standard costing was founded in 1930s in US.It is estimated that all the fortune 500 companies have adopted this managerial tool. The Chinese companies introducing this managerial system could be only traced back to late 1980s. With the competition in domestic industries becomes more and more intense, the chances for companies to gain excess return become less and less, which makes companies started to pay increasingly more attention to cost control. So activity based standard costing began to play an important role in our domestic companies. However, how many local companies could customize the activity based standard costing exactly according to their business reality and actual requirements so as to make the companies can transfer from extensive business model to an intensive business model is still doubtful.This paper is going to analyze the traditional theory of activity based standard costing firstly, then will introduce how do the modern companies combine the activity based standard costing with expense budget. Afterwards, I will introduce the SAP system and its managerial accounting module. Then I am going to analyze the activity based standard costing practices of BMS as well as the possible obstacles of domestic companies when they are implementing the system. Accordingly, I will give my recommendations for domestic companies to overcome the obstacles. In summary, obstacles and relevant recommendations could be summarized as following:Firstly, the strategic support from high level management is not in the place. Recommendations: management level should make sure that all departments cooperate with each other. And also need to design the organization structure, financial settlement system, performance measurement systematically so as to match with the new system.Secondly, lack of clear and smooth business process system. Recommendations: activity based costing should be built upon the clear and precise business processes. Only through the analysis of activities and eliminate the unnecessary activities, companies could control cost accordingly.Thirdly, the information system of local companies is weak. Recommendations: selecting the ERP system which can match with the requirements of implementation of standard activity based costing of company.Fourthly, some companies pay high attention to sales and marketing while underestimate financial controlling. Recommendations: management should clearly know the critical role for financial controlling in cost control, and proactively push the transfer of financial department from the function of accounting settlement to the function of financial controlling.Fifth, the understanding of activity based standard costing is not deep for companies. Recommendations: for companies in different industries, the design of cost variances, the maintenance of standard cost, the identification of key control points in operation, the design of cost driven elements and the cost allocation standards are all should be customized.The final purpose of this paper is to provide a practical reference to our domestic manufacturing companies which combine theories and practices.