A Comparative Study Of Activity-based Costing And Traditional Costing

With the continuous improvement of mechanization and automation,the production methods of enterprises change from traditional manual workshop production,mechanized production to automation and intelligent production,and the proportion of indirect cost to the overall cost is increasing gradually.The traditional costing method,using a single distribution standard to allocate the indirect cost,does not reflect the real product cost,while the activity-based costing introduces the activity-based drivers and resource drivers,which is more consistent with the value flow of the resources consumed by the product.This article compares the cost calculated by three traditional costing methods with that of activity-based costing in a large electronic component manufacturing enterprise,F company.It is concluded that there is a significant difference with the results between the single step method of traditional costing and the activity-based costing method;the result of the multi-steps method of traditional costing,which does not distinguish the auxiliary production cost,has a distinct difference with the activity costing method,but it is not very significant;the cost calculated by traditional cost method,which is multi-steps and does not distinguish the auxiliary production cost,is not significantly different from that of activity based costing.This article also compares the error of the two cost accounting methods under different resource consumption modes.The error generated by activity-based costing is less than that produced by the traditional costing method.When the proportion of resource usage is similar,the error generated by the activity cost method is equal to the traditional cost,but it can be reasonably speculated that even though the difference in the proportion of resources is small,the aggregation error of activity-based costing method is not greater than that of the traditional costing method.When the proportion of the resources usage is different,the aggregation error generated by the activity-based costing is less than that produced by the traditional cost method.After comparing the activity-based costing method with the traditional costing method in many aspects,in order to reduce the error and improve the accuracy of the cost accounting system in enterprises,the following suggestions are proposed for the enterprise managers to refer to:Strengthen the promotion of the activity based costing in the enterprise,in order to reduce the cost accounting error;rationally divide the activity drivers,design the activity cost accounting system scientifically;combine the resource consumption mode and introduce the cost accounting error analysis;perfect the connection between ERP system and activity-based costing management system.