Research On Application Of ABC For S Pharmaceutical Company

Tradition costing cannot satisfy the requirement of the enterprise is more and more accurate cost information.The enterprise in order to achieve the maximum benefits and long-term strategic goal,to seek a more advance and more accurate method of cost accounting,Activity-based costing to cater to the needs and is widely use.Activity-based costing is based on the new concept that products consume activities and activities consume resources.Activity-based costing is based on activities,recognition and measurement all the activities which consume the resources of the enterprise.According to resource driver,cost are collected to the activities,then choose the right activity driver,distribute the cost to the product or service.Activity-based costing allocates costing by activities,objectively illustrates the relationship between resource consumption and product cost,which keeps the result of cost accounting more accurate.For pharmaceutical companies,the accurate cost information is very important to the business decision,such as product pricing,sales strategies.But under the tradition costing is easy to cause the distortion of cost information,so introduce the Activity-based costing can solve this problem better.This paper studies the real situation of the S pharmaceutical company,analysis of company’s production process and the limitations of existing cost calculation method,put forward the necessity and feasibility of introducing the Activity-based costing.Through the efforts to set up Activity-based costing for the fact of the S pharmaceutical company.Using the tradition costing and Activity-based costing to calculate the cost of the sample products,by comparing the result of the differences,proved the superiority of Activity-based costing,it can provide accurate product cost information,and the information can also be applied to the business decision and cost control.