Research On Implementation Of Activity-based Costing And Its Support For Decision Making In W Company

The further development of market economy and the formation of purchaser market bothset a higher demand on decision level fromthe company managers got involved in the competition.And the decision makers turn more dependent on the sufficient operational data and scientific management tools. As a part of operational data within a company, the importance of accounting information is gradually recognized by the management. As for most manufacturing companies,cost information belongs to the core parts of the company accounting information. Traditionalcostingmethodsare based on simple assumption of cost drivers, and they could not meet the requirement onsupporting operational decisions from company managersin a competitive market environment. So seeking the improved cost accounting system to obtain timely, accurate and relevant cost information is a necessary demand for numerous company managers.And activity-based costing system is one of the best tools to improve costing system.This paper takes the background that W company needs cost information for decision-making of investment in fixed assets, and study the implementationof activity-based costing to support operating decisions.In the process of the study, it first showsthe weakness of the simple cost system in W company, and analysis the necessity and feasibility of improving cost system; next it describes in detail the steps to implement ABC according to the principles and ABC related theories, and the result from ABC is compared with simple costing system by a numericalexample; the paper finally describes process that how W company use result from ABCto help make decisionswith constrained resources.The study in this paper takes full account of the practical situation in a manufacturing company forimproving the costing system to a reasonable degree, and it describes the process of using better accounting information to support operational decision making. Expect that the paper will havea referenceeffectto the small businesses on how to use ABC systemrationally, and also help managers to use accounting information positively.