Application And Research Of The ABC At M Electrical Equipment Manufacturing Company

Since the 80s 20th century, production of highly automated formed the basis ofthe high-tech, has greatly changed the product cost structure, as well as more varietyin product demand, Direct materials and direct labor costs fall in the share of cost andthe proportion of manufacturing costs have increased substantially, which makes thetraditional method of cost allocation of a single manufacturing cost of the number ofstandard methods were not suited. Traditional costing methods couldn’t adapt modernmanagement requirements, and need for timely change. Cost has become the vitalresources which copes with market competition and maintain enterprise customerrelationship. To realize business strategies, enhance enterprise competitiveness, thecost must be carefully studied, enterprises should analyze cost behavior, control theirchanging patterns. Therefore, the study of the costs and cost management is animportant issue facing enterprises. In traditional cost management system, the cost ofbusiness is different according to the purpose and it is distributed in differentapartment. The enterprise can’t understand it in detail. Since there is no complete costinformation, enterprises are difficult to find the problem from the cost managementand to conduct the rationalization and improvement of economic efficiency. With thebackward of traditional cost management methods and the problems rises gradually, itneeds to find new ways to change the backward status quo.The activity-based costing is not only a new cost accounting method, but also anew management tools. Unlike the previous method of cost accounting, ActivityBased Costing in the process of accounting will cause the cost accounting focus on the root causes that occurred with the previous cost accounting methods, Productoperations by the resources consumed by accounting, so that under the traditional costmethod but not the control of overhead costs, activity-based costing has becomecontrollable, better cost method to overcome the traditional shortcomings ofdistortion in indirect costs.Activity-based costing (ABC) as an advanced cost accounting methods,originated from the United States at the beginning of the last century. After about 100years of development, ABC has established a sound theoretical system. And with thedevelopment of production automation and management informationization, thisaccounting method has been successfully implemented in various industries.ABC isnot only an accurate cost accounting system, but also an advanced businessmanagement. It promotes the finance system while optimizing the production process,by the combination of the two. And it has a great significant to the enterprises in afierce competitive market.The purpose of this thesis was to explore the application and research of theABC at M electrical equipment manufacturing company. The problems of the M costmanagement, the paper carried out a detailed investigation and cause analysis, then,starting from the basic concepts of activity-based costing, activity-based costing inthe application of the Company M, And design of activity-based costing in CompanyM of the application program.