Research On Activity-based Costing Application In A Machinery Manufacturing Company

In recent years, affected by the global economic downturn environment, China’s economic growth rate continued to slow down, the Chinese government is trying to make a transformation from an economy whose growth is mainly driven by investments to one that is powered by consumption and services-driven. Due to the reduction in fixed assets investment growth rate, the manufacturing industry is facing many unprecedented challenges. Enterprises must strive to reduce costs, to seek management innovation, improve productivity for survival and development. The Activity-Based Costing(ABC) method can provide more accurate cost information relative to the traditional cost method. It is an important means to control cost and to promote scientific management.In this paper, Firstly, based on systematic researches about ABC/ABCM theory, analyses the defects and reasons about the existing traditional accounting method, according to the current situation of A Machinery Manufacturing Company, and puts forward the feasibility of the introduction of ABC. Secondly, presents a design that how to apply the theory to practical business of the company and illustrates the implementing procedures of ABC. Moreover, reveals clearly differences in the indirect costs of the two accounting methods of ABC and traditional method through the cost comparison of two types machine, a small NC inputting frequently and a large NC putting on production repeatedly, so that makes the empirical differences between the two cost accounting methods with objective data and theoretical support.The core of ABC is the selection of cost drivers. This paper uses the simple correlation coefficient, partial correlation coefficients and statistical methods to analyze the goodness of Fit analysis of the relationship between cost drivers and cost, hoping to provide a reference for other industries.