The Study And Application Of Activity-Based Costing

Using the evaluation of application of ABC in 8 enterprises as a springboard, this paper makes tangible, deep researches about the ABC and its applying based on the theory and practice. This thesis consists of three parts. The first part which comprises chapter one and chapter two introduces the theories of ABC. The second part which comprises chapter three, chapter four, chapter five and chapter six makes systematical study on the applying theory and applying base of ABC.The first chapter introduces and analyzes concepts connected to ABC, new concepts of cost and enterprises triggered by ABC, activity-based accounting , activity-based cost management and basic cost system of activity, for a basic understanding aimed at a comprehensive, systematic study on basic theories and application of ABC. Activity collectively refers to a series of tasks related to each other, or energy consuming activities conducted within an organization for a certain purpose. Activity is an element and objective foundation in the process of cost accounting. Awareness and integration of homogeneous activity, construction of activity center and activit-based cost pool are where ABC differs fundamentally from traditional costing, which enables cost accounting and cost management to reach the level of activity and unveil cost information and effectiveness of activity. ABC therefore can suppjy more relevant, "relatively accurate" cost information of products and dynamic basis for activity management. Though activity can be classified from different angles, this article agrees more on "whether activity increases customer value". Being a core domain of ABC, cost driver is manifested by "quality" and "quantity". Qualitatively, it is manifested in "cost initiator" or "cost promoter"; Quantitatively, it is manifested in the scale to which activity can be measured. Cost driver stresses concrete cost promoter, or the quantitative standard of activity. Cost driver, which has different classifications according to different standards, is mainly classified according to ABC principle in this article. A two dimensional cost concept ("cost distribution concept" and "process analysis concept"), cost habitudal view and customer value concept are successively introduced. Information supplied by "cost distribution concept" helps to analyze various decisions, while "process analysis concept" reflects demand of an organization on new type information that affects enterprise achievement. Cost habitudal view classifies cost into short-term dynamic cost, long-term dynamic cost and fixed cost. Customer value concept means that ABC system should concurrently supply information of what customers have gained and consumed and ensure that customers can obtain as much profit as possible by reducing customer cost and increasing customer profit. In the end, ABCS is introduced, which consists of AA, ABM and ABD with ABC as their core and computer as their instrument and bridge.Chapter two begins with the comparison between traditional costing and ABC, illustrating the basic principles of ABC. In ABC, the "Black box" of amortizing of traditional costing-the box of activity is open. There are two steps in costing. First, identify activity, main activity and activity set up activity-based cost pool according to the same characteristical activity, and distribute indirect cost to activity-based cost pool on the basis of resource driver; Second, distribute the cost in activity-based cost pool to final product on the basis of activity driver. The basis standard of cost distribution is cost driver, and the selection of cost driver is the key in costing. In the sub-chapter: the selection of cost driver, the following topics are illustrated: the elements which influence the resources driver, the analysis of selecting the number of cost driverand the strategic cost driver. The main factors affecting the selection of resources driver are the aims of ABC, cost, behavior and so on. The following conclusion can be drawn: the objective of corporation is the main factor whi...