Application Of Activity-based Costing In Petrochemical Warehousing Enterprises

With the popularization of IT technology and the gradual application of ERP and MRP systems,the manufacturing environment has undergone tremendous changes.In some cases,using traditional costing methods will lead companies to make erroneous economic decisions and harm the economic interests of the company.On the one hand,changes in the manufacturing environment have led to significant changes in the structure of cost,manufacturing costs have become increasingly prominent impact on cost,making the cost of products under the traditional cost accounting method of allocating manufacturing costs in proportion to machine time or labor hours have a large deviation between actual cost,which is not conducive to the company's future product pricing and optimization of the business structure;on the other hand,the cost control under the traditional cost-based nuclear algorithms may cause companies to carry out mass production in order to pursue favorable efficiency differences,resulting in inventory backlog;In order to facilitate price differences,low-quality materials are purchased,affecting the final product quality and corporate reputation and other negative behavior.The concept of cost contained in the Activity-Based Costing(ABC)means that “production leads to operation,products consume operation,operation consumes resources,and causes cost to occur” which reflects completely the cost value chain.From the initial consumption of cost resources to the transfer of the value of intermediate links,to the realization of the final customer value,the entire value chain can be clearly displayed with the help of operations,facilitating the enterprises to carry out cost accounting and research.Founded in 1990,X Company is the largest third-party commercial storage and transit base in the country.It does not engage in oil trading and sales.It mainly trans-ships and stores crude oil,fuel oil,as well as international bonded oil products,re-export trade in the bonded area and piers and other services.Although the company has always maintained high growth and returns,the rising costs and the high demands of the energy industry for the storage industry in the new era have caused the company to face enormous management pressures.Therefore,the company needs to refine management and excavate the room for improvement in cost control and day-to-day management of enterprises and make targeted improvements.In the process of using the ABC,Company X followed the transition from activity cost accounting to activity cost management.Through the combination of marketing,production and energy management,a preliminary operating cost management platform was formed.However,ABC has a strong systemic nature,and it also needs to combine with budget management and benchmark management to build an operating cost management system.Firstly,this article introduces the basic theory of the ABC and on this basis,it states that on the one hand,facing with the cost problems,X company needs to use the ABC to carry out cost accounting;on the other hand,X company's existing resources and the cost characteristics also support the use of Activity-Based Costing.Secondly,the paper introduces the application of the ABC in X company including accounting and management practices.It introduces three major management accounting tools including value stream analysis,fish bone diagram and PDCA based on the ABC.A cost accounting and management practice application system based on Activity-Based Costing plus management accounting tools is formed finally,the article points out the insufficiency of X company in the whole application process of ABC and puts forward some suggestions for improvement.