Analysis Of Application Of ABC In Commercial Bank Of China

Activity-based costing (ABC) is the new theory and method of cost management, which rose and was applied in advanced manufacture enterprise of West in the twenty- eighties. ABC can overcome the several defects of traditional cost method. It can offer lots of correlative and exact information, which will benefit for strategic management, seeking opportunity of development and gaining long-term predominance of competition. This paper firstly introduces its background of producing, history of development and basic concept. Then the paper discusses the application of ABC in commercial bank of China from four aspects.The first section analyzes the application of ABC in foreign country. It shows the ABC has widely used in manufacture, commerce, finance, transportation, public utility and so on. And the management of them has shown distinct effect. But the application of ABC in our enterprises is not successful. The reason is that the majority of enterprises are not provided with condition of application. Then this paper analyzes the application of ABC in the commercial bank of China, which are provided with condition of application.The second section finds the problems of costing and cost management in the commercial bank through analyzing the status quo. The problems are that the commercial bank of China only pays attention to command of explicit expense, but overlooks implicit cost and opportunity cost. And the commercial bank of China has not the conception of value chain. Then the paper sums up necessary trend of applying the ABC through analyzing external and inner competition environment. Through analyzing the conditions the paper sums up that the commercial bank of China has the applicable conditions.The third section focuses on that the commercial bank of China how to realize the activity－based cost. The third part firstly explains how to establish the cost counting system with ABC and the cost analysis system with AM (Activity-Based Management). Then it discusses the advantages of ABC. Finally the paper puts forward the two examples of costing and budget of credit department to show the progress of counting of ABC and explains the advantages.