Telecom Cost Management Research Based On Activity-Based Costing

With more and more drastic competition of telecom industry in china, telecom enterprises are starting with interior management to strengthen the competition of their enterprises. however, the core issue of interior management—cost management still is a puzzle that feazes enterprise operator and government ruler. At the present time, most of telecom enterprises of china adopted the traditional cost account means and didn't establish cost management system that taking production and client as core. The reason is allround: First, character of technic and economy of telecom decides the complexity of telecom cost structure; Second, telecom operations have the characteristic of common network; Third, the technic and service innovation of telecom is developing very fast. Therefore, telecom cost account still hasn't compassed a recognized theory and means, and presently comparatively coherent point of view considers that the account and analysis of telecom cost mainly has two blue prints: the cost analysis based accountant and cost surrogate model based computer system that worked as measure economy cost model. At the same time, both don't settle cost management issue of telecom enterprise from root. So we need to introduce a new method to settle this issue, and it is namely Activity-Based Costing. The person who firstly bringing forward Activity-Based Costing is outstanding accounting master in 20 century, Professor Eric Kohler, coming from America. And after that the development of Activity-Based Costing approximately came through three phases, and in near several years it came forth new developing upsurge. The principle of Activity-Based Costing is that race back resource cost to activity by changing reason of resource cost, and do activity-based costing to production, service and consumer and so on. Because that Activity-Based Costing don't only get over the disfigurement that traditional costing distorts overhead expenses but also lead gerentocratic view to changing reason of resource consuming and analyse the cause and effect that cost comes into being. And so it accords with the demand of telecom which is in dire need of strengthening interior management and reducing cost. On the side, though Activity-Based Costing comes from manufacturing, if we observe the characteristic that overhead costs account for comparatively bigger proportion for service trade we can find out that service should have more room for putting into practice. Therefore, introducing Activity-Based Costing into telecom enterprise accords with characteristic and developing direction of Activity-Based Costing. The cost of telecom enterprise may be disparted into two parts: operation cost and assets cost. And its cost structure can be expressed as follows: net value of permanent assetcapital costoperation capital costthe finacing cost of accountingpermanent assetnon-networkdepreciation cost of non-network of common permanent asset of network and depreciationnetwork permanent asset costdepreciation costasset costdepreciationcapital costtelecom costoperation costasset cost =++=+=+=+ Most of the operation cost and asset cost can't be apportioned into production and client directly, so we need to establish four administrative levels and dimensionalities between cost and production or client to carry out cost apportionment for several processes. The four dimensionality include operation flow (including network and non-network operation flow), permanent assets (including network and non-network permanent assets and common permanent assets of network and non-network), departments, logical network element. The apportion from cost to different dimensionalities is based on different cost changing reason, for the cost that we can't find effective cost changing reason or which affects the apportioning result very little for its proportion we can adopt indirect fixed costs apportioning method. Idiographic apportion process includes two parts: operation cost and capital cost. For operation capital, we can apportion network and non-network operation flow cost based on network and non-network operation flow, and then apportion network operation flow cost into network element, and production and client. Meanwhile it includes non-network permanent assets and department. For the apportionment from some non-network permanent assets to department, which can be based on working area that every department engrosses. For the apportionment from department to operation flow, we can base it on...