Research On The Utilization Of The Target Costing For Cable In Kunming

Electrical wire and cable are fundamental materials which are essential for transferring energy and carrying messages. As today's rapid developments of human society informationization and the electrification, the wire and cable becomes the one of basic products on economic development. The wire and cable industry is the supplementary business of the national infrastructure, their products have to meet the performance requirements which the mainstay businesses of national economy have made demand to themselves. Most of industries of our national economy have to do with wire and cable industry, therefore, the position of its pillar industry is getting more and more important and it is acknowledged as the "blood vessels" and "nerves" of the national economy. Currently, both of the variety rate and the domestic market share in the wire and cable industry are above 90 percent. Moreover, the production capacity in this industry has already greatly exceeds the market demand.In terms of financial operating ability, the rising cost of raw material (such copper, aluminum, and etc) makes it difficult for this industry for its operation since it lacks of an efficient risk management system. Furthermore, the main target customer for most of the domestic cable industry products is the monopoly SGCC (State Grid Corporation of China), for such a long time, there are plenty of defaults on account receivables. Plus the upstream suppliers are all large-scale state aluminum and copper groups, the cable industry which stuck in the middle will be confronted with lots of difficulties such as vast quantities of inventory, lots of account receivables, lacks of operational funds, etc. The profit margin becomes awfully low. How do we work out these problems? The cost control then becomes a top priority subject.This article will take Kunming Cable Group Co. Ltd (hereinafter referred as KM Cable) as an example, use different methods such as document literature and records lookup, fact finding, information gathering and analyzing, demonstrating, etc.; analyze the internal and external business environment by applying the system theories of cost management; and combine the company's actual situation of implementing target cost control to lucubrate the prime cost factors which will affect the development of the corporation. It will also expatiate the corporation's development strategic cost positioning, strategic targets, and the overall process of establishing the target costs. This article furthermore will discuss the implementation and control of its target costing in detail.This article methodically researches the target costing in KM Cable. Its research result will establish a good foundation of the internal cost control for the corporation's later on expansion. In the mean while, it will also provide reference and consultation for the other wire and cable businesses in terms of internal cost control.