The Study On Product Cost Control In HY Company

With the deepening of the economic system reform of our country, the management environment that enterprises face has changed enormously, and market competitions are becoming fiercer than ever. The product cost of enterprise is not only an important factor influencing enterprise profit level, but also an important issue influencing enterprise competitiveness, survival and development potentialities, and implementation of product cost control is the base that enterprise establishes and executes development strategies. This text has analyzed internal and external management environment that HY Company faces, and the competition pressures coming from domestic and foreign automobile spare parts enterprises especially with China's entry into WTO, then put forward that strengthening product cost control is essential and urgent. Firstly the main and modern product cost control methods such as value engineering analysis, cost drivers, value chain and so on are explained in the paper based on the basic theory of product cost control. Then the current product cost control and the main problems existing in product cost control are analyzed in combination with production and management of HY Company. The detailed resolutions for product cost control in HY Company are set forth as follows: 1. Establish product target cost system and take the target cost as the criteria for product cost control. 2. By analyzing product value chain and cost drivers, the basic activities of HY's operation chain (value chain) are summarized as three primary activities, including incoming logistic activities, production operation activities, marketing and service activities, and four secondary activities, i.e. purchasing, product design, human resource management and general enterprise administration. The cost drivers for each activity are analyzed and cost control objects for main product is determined. 3. Product cost control responsibility is to be perfect in combination with detailed operation activities. 4. Cost control measures for key cost drivers are established, which includes product design activities, production operation activities, marketing and service activities, purchasing cost, human resource cost, general administration, quality cost and so on. Finally three proposals are put forward to ensure the product cost control resolutions can be effectively implemented: 1. To establish a new concept of cost control in modern market economy. 2. To establish performance evaluation system. 3. To establish and perfect comprehensive budget administration system.