Research On The Cost Management In Water Supply Company Of XD District Based On Standard Cost Method

The water supply company is responsible for the safe use of water for urban residents.With the continuous development of China's economy,the nature of the water supply company has gradually changed from the public institution to the financially-independent enterprise.As an enterprise with the unique nature of public utility,water supply company has difficulty in doing management.On one hand,the price of tap water is controlled by the government,and the water supply company cannot set the price independently;on the other hand,the cost of tap water supply has been rising in recent years.Water supply companies in most parts of the country are always in the red year after year,so it is particularly important for them to control costs.This paper takes the Water Supply Company of XD District as an example to have a research on its cost management problem with standard cost method.After more than 30 years of development,the Water Supply Company of XD District is in a relatively stable state.In recent years,the cost of tap water supply has increased year by year,while it is difficult to raise the price of tap water,so the company's losses are increasing.There is a lack of cost management system,and there are problems in cost management work,for example,the leaders are weak in cost management awareness;the company is in insufficient cost control of the production process,and it is lack of cost standards,etc.In order to control costs,the company urgently needs to introduce a scientific cost management method.The standard cost method refers to a cost management method in which the enterprise implements cost control by comparing the standard cost with the actual cost,calculating and analyzing the cost difference and revealing the cause of the cost difference based on the pre-established standard cost.After decades of development,the standard cost method has been widely adopted by companies in various countries around the world.It is adaptable for enterprises who have stable product and production conditions and high standardization of production processes.Since the production of tap water meets the requirement of the application of standard cost method,the author chooses it to have a research on the cost management problem of the Water Supply Company of XD District.Based on the standard cost method theory,this paper designs cost application plan and puts forward suggestions for the Water Supply Company of XD District.It is divided into six chapters.Chapter 1 is the introduction part which describes the research background and significance of the paper,summarizes the domestic and foreign literature and explains the structure and content of the paper.Chapter 2 reveals the cost management theory and the standard cost system theory.This chapter introduces the content of standard cost method,the establishment of standard cost,the calculation and analysis of cost difference,and the accounting treatment of cost difference,which provide a solid theoretical foundation for the paper.Chapter 3 analyzes the current situation of cost management in Water Supply Company of XD District,pointing out that there are four problems.This chapter also analyzes the feasibility of applying the standard cost method.The result shows that it is feasible.Chapter 4 designs and applies the cost management plan of the company based on the standard cost method theory.Firstly,it constructs a standard cost system and develops the standard cost of direct materials,direct labor,variable manufacturing expenses,and fixed manufacturing expenses according to the company's historical production data.Secondly,it compares the actual production data of the company in 2018 with the standard cost,calculates cost difference of each item,and analyzes the reasons for the difference specifically.Finally,it finishes accounting treatment.Chapter 5 puts forward suggestions for the cost management problem based on the reasons in the last chapter to improve the cost management work.Chapter 6 is the conclusion part which summarizes the research results of the paper.The author hopes that,on one hand,the Water Supply Company of XD District can benefit from the result of this paper,reduce costs,reduce losses and improve efficiency,and on the other hand,this paper can provide reference for water companies in other regions who have similar problems.