Research On RY Company Cost Management Issue

Cost Management is a key factor for a company's survival and development, it is also the focus that many companies have been discussing on. Every company needs to make continuous effort to improve its cost management.Currently the global economic situation is not so optimistic and many manufacturing enterprises are facing even more severe challenges. With economic uncertainties in future, one solution for an enterprise is to work better on cost management through internal efforts, which will lead to an improved performance and make it possible for the enterprise to survive, develop and make profits.The precondition of a successful cost management is that the enterprise must know its costs in great details, therefore, good cost management comes in parallel with a sound cost accounting system. It becomes even more important for an enterprise to implement a low cost strategy while carrying out cost management on the basis of a solid cost accounting system with assurance of product quality and value added to the customers.Activity Based Costing method is an advanced cost accounting method, standard costing and budgetary control are good cost control methods that can be used as benchmark guiding cost management. This thesis investigated on the cost management methods of a foreign invested company (Namely RY Company), which integrated Standard Costing with ABC and built those into an ERP system. Meanwhile, Through research on current status of RY company's cost management system, it is also pointed out, based on the existing good costing accounting system, that RY company should expand the application of the ABC method in areas rather than purely on production, there are still space to improve on preparation of budget and standards, on budgeting process and on that more people should be involved in the budgeting process. A cost control responsibility system should be implemented and result of cost control and variance analysis should be integrated with the performance evaluation system to seek for further improvement on cost management.