The Research Of Activity Based Standard Cost Method In ES Company

With the continuous deepening of globalization, internal and external business environment has undergone great changes. Right now because of new technologies, new skills and new requirement for products, the traditional standard cost method is suspected which is based on direct raw material and direct labor. On the other hand, the activity based cost is a new method to distribute the overhead expenses in new manufacturing environment, but in the past20years, the ABC cost is not in the universal application, the reason for this is ABC cost is mainly focusing on the distribution of overhead expenses. These2costing method have advantages and shortcomings, so in order to be fit for the new business environment, there is a need to consider the question of how to include standard cost method and the ABC cost method together, which could not only maintain the advantages of internal control of standard cost, but also keep the advantages of ABC cost method to distribute overhead expenses.This article mainly focus on how ES company put ABC method and standard cost method together and explain the whole process of it and how the new costing method is used in ES company. This document has a total of5parts, the first part focuses on relevant research background and research objectives, and so on, the second part is the theoretical part of the standard cost and ABC cost which is about the strengths and weaknesses and the trend of these2cost method to combine as a new cost method:the activity based standard cost system. The third part is an example of how ES Company step-by-step set up and improve activity based standard costing system and makes it effective for costing calculation and internal control. Part4, further explains how ES company use the activity based standard cost system to improve the cost management and company control level. In part5, it is about the summary and outlook.From the result of ES Company improving their accounting management system. ABC cost and standard cost method is not completely contradictory, but rather complementary. The activity based standard cost method has retained and absorbed advantages of these2methods, but also reduce their shortcomings, it has really provided a new idea to the cost control and management of today’s’enterprises.