A Research On The Application Of ABC In Service Pricing In Thesmall And Mid-Sized Home Furnishing Business

Due to highly competitive environment,traditional manufacturing companies input more and more investments in R&D to have themselves be more competitive.Or they are moving themselves from manufacturing industry to service industry.In the past,the direct costs such as direct materials and direct labors are the major costs of their products.So,the traditional accounting system is good enough for them to find out the costs information of their products.However,for service industry,overhead costs contribute to the most of costs in their products and service.So traditional manufacturing companies require a new method to find out their costs of products and service correctly.Activity-Based Cost(ABC)system is now a widely used method to distribute the overhead costs to final products or service.Company A,that is a home furnishing company,is selected as the real case in which ABC system is applied to solve out a real question of pricing the design proposal.In this case,linear regression model and multi regression model are built up to find out the relationship between activities and activity drivers quantitively.Coefficient of correlation and alternative hypothesis are applied to test the correlation between activities and activity drivers which are dependent variable and independent variable in the model.The article finds out the way of quantifying the relationship between activity and corresponding multiple activity drivers and finding out the fittest activity drivers to an activity.