Design Of Cost Management System In Agricultural Virtual Enterprises Based On ABC/M

Agriculture is the basis of our national economy, supporting the continuous development andprogress of the entire national economy. However, the produce production in our country lacks oflong-term development plan, price warning mechanism and a sound industrial system currently,resulting in price fluctuations of agricultural products significantly, which is detrimental to thecommon interests of both agricultural producers and consumer markets. Thus, this paper constructsan organizational structure system around the prenatal, delivery and postnatal services required bymodern agriculture development, embodied in virtual enterprises with the link of produce supplychain, namely, the agricultural virtual enterprise (AVE), to integrate scattered farmers to weakentheir market risk exposure and add value to produce by AVE’s integrated operation processes ofproduction, processing and distribution, improving production efficiency effectively.Cost optimization management is the guarantee of the efficient operation of AVE. Createeconomic benefits for AVE by enhancing cost control and management, emphasizing the costrationality and necessity, minimizing the cost of produce into the market, to better meet thedemand of market at the same time, achieving "win-win" results.Thereby this paper structures supply-chain-styled AVE in line with the current agriculturalproduction situation, beginning with the analysis of domestic agricultural reality of “supply,production and sales”, defining its organizational structure and cost management objectives.Analyze the necessity and applicability of activity based costing/management(ABC/M) modelin AVE based on clarifying its working principle and structure a comprehensive ABC/Mconcept model designed specially for AVE, serving for its definition and implementation ofstrategic objectives throughout the whole process.Cost management system of AVE designed based on the comprehensive ABC/M conceptmodel includes three subsystems of computation, control and evaluation. ABC/M computingsystem is constructed by analyzing cost drivers of AVE, detailing computation process andconducting simulation. Introduce transfer price concept to solve problem of cost shield arisenfrom the cost control process of VE and set target cost level in the cases of with and withoutexternal market respectively with the use of computation results from ABC/M computingsystem so that the design for ABC/M control system of VE is completed. Construct ABC/Mevaluation system of AVE combined with balance score card, considering the specificcharacteristics of AVE after analyzing its design principle. Design evaluation index, chooseevaluation method, establish evaluation process and conduct simulation using yaahp0.5.2.