The Research On Activity Based Standard Cost Method In YG Company

With the development of automation technology, the enterprise cost management is no longer content with merely the cost accounting and control. The Enterprise Decision expects to see more services in the strategic level of cost accounting information. The cost advantage is the core competitiveness of enterprises. Reasonable accurate cost information and controllable cost management are advantageous to the long-term development of the enterprise. In new economic environment, the proportion of indirect expenses cost has increased. While today's manufacturing industry are advancing to small-batching, multi-batching and product differentiation, single index such as machine hours and artificial hours are still being used for indirect cost allocation in standard cost method, leading to information distortion. Standard cost method focuses on manufacturing process, its ignorance of R&D and sales costs exposes its limitation. ABC (Activity Based Costing) method provides a more reasonable method of indirect cost allocation. However, ABC method is not widely applicated because it cannot provide variant cost information. Indication shows that both ABC and standard cost method needs to be improved. Wherefore, activity based standard cost method, which combines the advantages of ABC and standard cost method, can provide accurate variant cost information.This dissertation focuses on how to combine the ABC method and the standard cost method in Cost accounting System of YG Company, and list the process of construction and application of the system. This dissertation consists of five chapters. The chapter focuses on background, research objectives, research significance, search synthesis and research technique; The Second chapter makes an exposition of the basic overview and relevant theory of the activity based Standard cost method. Comparative analysis of both the advantages and disadvantages between the ABC method and the standard cost method and draw an optimistic conclusion that necessity feasibility of combining the two. The third chapter illustrates the process of building and improving activity based standard costing system with the example of YG Company and makes it effective for calculation of net cost and built-in control. Chapter four further introduces the application of activity based standard cost system improving the cost control. In chapter five lays conclusion and research prospect.The result indicates that ABC and the standard cost method are not mutually exclusive, the activity based standard cost method complement two method to provide accurate variant cost information, is a more effective accounting method for modern enterprise.