Activity-based Costing Applied Research Of L Household Appliances Company

Facing the increasingly fierce competition between white goods brands in present market,it is urgent for companies to boost their profitability and enhance their core competence.Considering R&D and marketing approach are given,clarifying costing information and enhancing cost control are crucial in this context.With the improvement of technology and automation among household appliance companies,indirect expense has been taking up an increasing portion in a company's cost of production.Thus,traditional costing system could no longer meet management's demand under this circumstance.However,most domestic companies still prefer conventional cost method in their accounting systems.Based on above background,this paper aims at analyzing the necessity and feasibility in carrying out Activity-Based Costing system,short as ABC system,in Company L.Firstly,this paper illustrated main literatures and concepts regarding ABC,which supported practical implementation of ABC system in later chapters.Then the author chose Company L as the target and analyzed company's current condition and costing system.By demonstrating the weaknesses of contemporary costing system,the paper proposed the implementation of ABC.The second part,following the introduction of ABC,focusing on deeper research into Company L's costing system.In the advanced investigation,the author got the first-hand data and constructed ABC system.Then,the core approach in the system was analyzed and compared with traditional costing system.Based on the calculation on products costs and gross profits,this paper got to the conclusion of the result of carrying out ABC system,andraised suggestions related to company main decisions including pricing strategy.Finally,the paper would provide approaches concerning detailed steps in applying ABC system in Company L and generalize the conclusion on Company L's ABC system to other white goods companies.