Study On The Application Of Activity- Based Costing In Petroleum Engineering Enterprises

Since 2014, international oil prices has fallen sharply, the entire oil industry has entereda winter period.Domestic oil production enterprises are facing severe market situation and under great pressure.Petroleum drilling engineering, an important part of the oil production, its operation process is costly, and the numbers of domestic petroleum drilling engineering company have increased a lot in the past few yearswhen oil prices are high, causing an increasingly fierce market competition.Now,the growth of companies' profit significantly decreased, for some companies, their growth rates are even negative.Therefore, petroleum engineering enterprises should strengthen their cost management, finding out the sources of cost, reducing costs in all aspects of the production process in order to enhance the profitability of enterprises and to meet the challenges brought about by the "cold" market with a more relaxed attitude.Activity- based costing(ABC)is a rather advanced cost management method. Regarding the "activity" as the core, "products consume activities and activities consume resources" as the center of thought, ABC divides manufacturing process into many activities. Through the analysis and use of cost drivers, ABC connects resource costs to anactivity firstly, and then allocates costs of activities to products and services.Compared with the traditional cost method, it's more comprehensiveon the cost accounting, covering the entire production process, broadening the product cost calculation, providing more accurate cost information for enterprises.In addition, establishing the activity-based costing systemcan combine accounting and enterprise production, which is conducive to the implementation of more comprehensive management and control system,helping enterprisesenhance the core strength and competitive advantage.Foreign theoretical research about ABC is nearly perfect, but domestic theories applying to petroleum drilling engineering enterprises are still ongoing. Therefore, this paper uses literature analysis method, field survey and quantitative research method to study petroleum drilling engineering enterprises using activity-based costing. In the beginning of this article, the writer introduces the background and significance of this research, and gives a comprehensive statement of domestic and foreign research reviews of activity-based costing theory and its application with a detailed description of the operating cost method and its basic theories and calculation steps, fining out the comparative advantages over traditional cost method. After that, the article takes AJ company petroleum drilling engineering project as the research object,analyzing the current situation of the company's cost accounting and introduces the application conditions of ABC firstly.Secondly, according to the process of AJ company'sorganizational structure and the existing cost data, starting specific research of application of the activity-based costing in AJ company. After the division of 5 operations centers and 22 jobs, select the more scientific and reasonable cost drivers to calculate the cost, and compared and analyzed the existing cost accounting method and the accounting results calculated by ABC. Finally, the article raises some suggestions in terms of technology and management for AJ company's implementation of the activity-based costing method proposed. This paper aims to provide some constructive opinions and suggestions on how to introduce activity-based costing to the petroleum drilling engineering enterprises through the establishment of the AJ activity-based cost accounting model.