Application Of Activity-Based Costing In XY Cloud Service Product

With the rapid development of economy, China has emerged as the world’s second largest economy since 2010. As the development of the economy and competition increases, more and more companies begin to pay attention to users’needs and customers’ preferences, and show high demand for data analysis, Internet banking and big data become the focus of public opinion. So we can say cloud computing has brought another change in IT industry technology and business models, it also brings a data center (IDC) era of major industrial development. China’s IDC should at least expand twice the size before 2015 to meet the demand for internet traffic. China’s information level is very low, the future development and need for social information is enormous.Facing with such a huge demand for IDC, telecom operators that have absolute advantages in the network and data center resources are added to a wave of construction in IDC. However, due to the special nature of the information industry, usually the initial construction investment is huge, taking XY company as an example, the initial capital investment is up to 125 million,13.7 times higher than the operating cost of the first year. Compared to the huge investment during the construction, IT product life cycle is very short. Therefore, during the process of IDC construction and operation, how to improve resource utilization and control the cost is particularly important.However, standard of the traditional cost accounting method is the output of product, this distribution method is clearly not feasible in the cloud pilot project with a huge proportion of indirect cost in the cost allocation. As for lower operating cost method, allocation of indirect costs requires deep into the smallest unit of cost accounting to make more refined, enable companies to clearly understand the flow of resource consumption, understand which job is value-added operation, which is non-value-added industry, all these help to improve cost management.In this paper, the company will allocate indirect costs of XY cloud service products to a network operation and discuss about the costing issues of cloud service product with Activity-Based Costing.