Study On The Selection And Combination Of Cost Driver

In the last century, with the technology's developing, competition becoming much more aggravation, and with the application of advanced manufacturing mode, such as:integrated manufacturing, lean production and agile manufacturing. In most cases the traditional cost accounting methods do not apply with the development of enterprises. In this environment Activity-Based-Costing was emerged. It is a more accurate method for allocating indirect costs to the products. It is also being closed attention by persons in and outside of China. As a key step in ABC Cost driver selection and merger plays a very important position in the research of ABC. Currently, researching on the cost drivers attracts more and more of the academics'and practitioner's attention.With the introduce of Cost drivers in the selection and the merger theory of cost drivers in detail, and with a comprehensive review of the literature, this paper questioned whether the cost which was calculated by the representation of cost drivers decided by traditional merger theory is more accurate than the cost which was calculated by identified cost drivers by considering the cost driver selection and merging at the same time? This paper focuses on the question above. In the paper, we generate a model for choosing and merging the cost driver. The purposes is to spend lower implementation costs and simplify the system implementation of computational complexity, the constraints of the model is limited the cost to a range of accuracy. The cost of product in the case which use the model is more accurate. In addition,the error of cost which was get from the product cost before and after the merger of the representation of cost drivers, may be generate inaccurate benchmark problems. Then problem of determining Representative subset of cost drivers has not yet considered in the paper.