| With the time going on and technological innovation,manufacturing enterprises invest more money into the R&D and manufacturing machines resulting in the rapid increase in the period expense compared to the overall cost.Therefore,traditional costing method is no longer applicable to the allocation to the period expense because cost structure has been changed due to the increase of the period expense.Also,if we continue to utilize the traditional costing method to allocate the period cost,it will cause that the accounting information does not truly reflect the reality of the company and cost control will not be effective.Consequently,we can realize that traditional costing method is not applicable to corporation operation management in the recent years.Since the traditional costing method brings so many problems to nowadays corporations,Activity-Based Costing has been created to meet the current demands of corporations’ operation management because it focuses on indenting the cost driver for each different activity.With the help of activity-based costing method,corporations could provide more accurate cost information and have more effective cost control by identifying the value-added activities because only value added activities will be taken into considerations.Therefore,corporations will have more competitive advantages due to the drastic decrease in the cost.Household appliance enterprises make huge contributions to Chinese economy,and these enterprises’ cost control will have direct influence on people’s daily life.Therefore,I am going to use the case of TL household appliance enterprise to analyze how to reduce the household applicant enterprises’ cost with the application of activity-based costing method because cost reduction in household appliance enterprises has realistic significance.This paper analyzes domestic and foreign literature research and related concepts,briefly introduces TL Enterprise’s current financial situation and points out the drawbacks of its current cost management system based on the analysis of other relevant the theories such as the theory of activity-based costing method.After the identifying the drawbacks of TL enterprise’s current cost management system,a new cost management system will be designed to compare the results provided by the oldcost management system.The data comparisons will concentrate on the differences between two costing methods’ cost information and their influences on the cost management.At the same time,questions related to the application of activity based on costing and the necessary protection methods should be underlined during the application of activity based on costing method in the TL Enterprise.With the detailed analysis of the application on the TL enterprise,we conclude that activity-based costing can provide more accurate cost information for enterprises,and it is more conducive to enterprise’s production and operation management decisions and cost control.At the same time,the application of Activity-Based Costing in household appliance manufacturing must have the conditions of high automation level,high enterprise concern and active participation of all staff.The application of activity based on costing method could be utilized as reference in other enterprises in the same industry. |
