Activity-based Costing And Its Application

In the recent ten or twenty years, based on electronic technology revolution, advanced manufacturing enterprises with high automation came into being, which brought great changes in management conception and technique cost structure of products has changed greatly, which made traditional quantity-based cost calculation manifest product's consumption incorrectly, and provide wrong information of accounting for the enterprise. Activity-based Costing (ABC) is a way of calculating cost on the basis of activities. It basically solves the defects of traditional costing, and provides sound foundation for cost management. The trend of cost accounting is that cost calculation should be changed from traditional quantity-based one to modern activity-based one. Therefore, great theoretical and practical significance has been attached to the study and spreading of ABC in our country.The idea of ABC was presented by American accountant E.Kohler at the end of the 1930's, although put forward at that time, it hasn't attracted wide concern and intensive studies till the mid-1980's. When two professors from Harford University-Robin Cooper and Robert Kaplan - wrote a series of cases, dissertations, and works. After more than a decade's development, the theory of ABC has greatly improved and become more mature. Through introduction and study by some scholars ABC has been known to many people in our country. During the process of 20 years' development, ABC has been carried out and has obtained outstanding achievements in many advanced foreign companies, which formed obvious contrast to our national enterprises. This phenomenon is due to the large body of traditional enterprises on one hand, and relatively less research on application of ABC on the other.Western countries has achieved fast development on ABC's theory and application in terms of decision-making analysis and cost management. In recent years, the theory circle of our nation has made great efforts to study ABC. However, less concern has been showed to its application, which restrained its development. This article tries to discuss over ABC's application in terms of decision-making analysis and cost management, offer useful suggestions to its theoretical and practical development, and give comprehensive account of ABC based on our nation's reality. This article mainly covers the following aspects: the basic theory, application in decision-making analysis and cost management, the application by enterprises. In addition ABC is an open system, so it will continuously develop with the development of science and technology, which encourages us to do further study and adjustment to it...