The Study On The Cost Accounting Of China Merchants Bank Financial Management Center Based On Activity-Based Costing

With the increasingly severe competition among banks and the changes in the overall profitability in banking industry, managers of banks have realized the importance of cost information. Time-driven activity based costing is a development of the traditional activity based costing analysis. It can be used in the customized management of the commercial banks, which increases the accuracy in cost information estimation. In addition, it also plays an important role in commercial banks’budget management and the analysis of banks’ profitability. Therefore, it is very important to study the applications of time-driven activity based costing among commercial banks in China.This paper is developed based on the studies of financial centers in China Merchants Banks (CMB). After examining the underlying problems in their process of cost accounting, the paper comes up with the solution that time-driven activity based costing analysis should be used to evaluate costs more precisely. The paper is constructed as follows. First, it talks about the basic theories and comparisons on traditional and time-driven activity based costing. After that, the issues in CMB financial centers’ cost accounting and control process are analyzed. The feasibility of application of time-driven activity based costing in CMB financial centers is further discussed. The paper then explains how time-driven activity based costing could be applied to the operation procedures in detail. The paper argues that the use of time-driven activity based costing method provides a solid foundation in CMB financial centers’cost management and development strategies.The paper provides some insights for CMB financial centers’ cost management. Such method could also be applied to other commercial banks. However, this paper merely provides information to cost management and control theoretically from a time perspective of view, which could be further developed. The paper differs from other papers as it introduces time-driven activity based costing into CMB financial centers, and developed a cost control system based on this.