Research On The Application Of Activity-Based Costing In KS Company

Since the Activity-Based Costing was proposed, it is highly regarded in theory. And it is also regarded as a revolution of cost management system, it is also considered one of the major achievements in the development of management accounting. Activity-Based Costing was produced in the modern enterprise manufacturing environment, and it makes up some disadvantages of traditional costing. Activity-Based Costing has strong applicability and it be used by many enterprises. Activity-Based Costing changes the traditional method of allocating manufacturing cost, so the information that it provided is more accurate, objective and comprehensive.This report will use KS company as an example, it will do some researches on the costing issues in KS company. KS company is a medium-sized manufacturing enterprise which produces mine hoist. For this company, many types of products as well as small batch production characteristics let the traditional costing make the bias bigger. With the expansion of KS company and the increase of the products range, the requirements of costing in KS company becomes more accurate. Therefore, the traditional costing can not satisfy the development of KS company. KS company should use Activity-Based Costing to improve the existing problems in costing issues.First, this report will introduce the background, significance, method and content of this report. Then, it will give an overview of the theory of Activity-Based Costing, including the costing principles of Activity-Based Costing and the differences between the traditional costing and Activity-Based Costing. Next, this report will analyze the current costing situation in KS company, and will propose to implement the Activity-Based Costing to improve the current costing situation. In the next part, it will introduce the specific steps of implementing the Activity-Based Costing and it will give the difference evaluation between Activity-Based Costing and traditional costing. In the end, the report will give some solutions to difficulties which will happen in the implementation of Activity-Based Costing.