Study On The Application Of ABC

In the new manufacturing environment and economic situation, plastic packaging industry of our country has developed rapidly, and it is facing great challenges as well as unprecedented and rare development opportunities.Enterprises need to pay more attention to management strategy. Especially for the manufacturing-based enterprises, efficient cost management is a core component of its management, which is also required to come up to a higher standard. As a result of technical development, production of enterprise reached a high level of automation. Great changes have taken place in the structure of the enterprise production cost because of the production mode reformation. Especially in the packaging business, complexity of products increased, to meet different customer needs. The traditional methods are no longer able to meet the requirements of business about accuracy of the cost information. And it makes it necessary for the enterprises to introduced new costing methods to improve the management level.As an advanced cost management method and concept, activity-based costing is a costing methodology--measuring resource consumption, analyzing cost driver, allocating costs to cost object--which focuses on the activity. When cost allocation is based on cost driver, the cost information will be more accurately. The application of activity-based costing is not widespread in domestic enterprises, In addition to the packaging industry as a sunrise industry in China, the cost management is still not perfect, as well as the industry, small and medium enterprises accounted for the vast majority, order type, difference of the mode of production, has decided to introduce ABC in the packaging industry is feasible. Nevertheless, defining and partitioning of activity is not that easy.This study will introduce the activity-based costing, and offer the HC Company as an example. Analyzing application requirements, getting clear impression of working process by visiting company as well as poring over documents, analyzing structure of production activities to identify the key activity, allocating resources to activities, analyzing cost driver, it design implementation and table for the HC Company.Calculating the costs of its products by means of activity-based costing, then compare it with the costs calculated by traditional cost accounting method. Analyzing the reasons for the differences, it demonstrate the accuracy of activity-based costing.