Modern Cost Management Model

Central Committee of CCP's Proposal on Enacting the Tenth Five - year Plan of National Economic and Social Development and PRC's Tenth Five- year Plan Outline of National Economic and Social Development highlight the strategic role of stepping up the reform, perfecting socialist market economy system and bringing into existence the modem corporate institution featuring distinct property right, definite rights and liabilities, separation between administration and enterprises, and scientific management. It is key to strengthen enterprise reform and management in order to boost state - owned enterprises, enhance socialist market economy and establish modem corporate institution. To establish modem corporate management institution, it is necessary to transform current operational mechanism adjusting to market demand, introduce scientific decision - making system and modem management practice with focus on management of quality, finance and cust. The initiative to construct the socialist market economic system and modem corporate institution has addressed new requirements and challenges to corporate cost management of China. Therefore, the study of the model of cost management under modem corporate institution has very far - reaching significance in terms of both theory and practice.Under socialist market economy and modem corporate institution, cost management should be based on Marxist theory of cost and price and Deng Xiaoping' s theory the theoretical foundation, and on the theory of emerging disciplines such as systematology, cybernetics, information theory, operational research, etc as the methodology foundation. In addition, cost management should strive to create the modem corporate institution and enhance economic benefit. The cost system in modem corporate system consists of 3 parts of theoretic cost, financial cost and managerial cost. What we illustrated in this abstract as the modem cost management model refers to the cost management model adapting to socialist market economy system and modem corporate institution as opposed to the traditional cost management model. In short, the model of cost management, backed by modern corporate system, is based on Marxist theory of cost and price, Deng Xiaoping' s theory and the methodology system including such emerging disciplines as systematology, cybernetics, information theory and operational research, focusing on improving economic benefit, with theoretic cost, financial cost and managerial cost comprising the cost structure. Upholding strategic cost management, it requires modernization of corporate cost management and adopts comprehensive cost management in micro management. And in macro management, it exercises a cost management system that incorporates two closely-knitted and interactive factors, i.e. indirect regulation of cost and management of industrial target cost.Main innovations of this abstract include:1. It pub forward the general model of cost management from macro and micro perspectives, i.e. modernizing cost management and introducing comprehensive cost management in micro level, and implementing indirect cost regulation and industrial target cost management in macro level.2. It holds that modern cost management should be backed by modern corporate institution, and focus on enhancing economic benefit based on the cost system of theoretical cost, financial cost and management cost,3. It argues that modern cost management shall be based on Marxist theory of cost and price, Deng Xiaoping' s theory and the methodology foundation absorbing theoretical achievement of modern natural science and social science, particularly the theories of emerging scientific disciplines such as systematotogy, information theory, cybernetics, operational research, etc.4. It brings forth the concept of modern corporate cost management and further elucidates the goal and process for an enterprise to modernize its cost management practice.5. It hammers out the innovative idea that modern cost management is comprehensive cost management...