The Application Of ABC To H Furniture Manufactory

Activity-based Costing(ABC) is a completely new enterprise management theory and method which rose in the late 1980s and was first applied in advanced manufacturing enterprises. ABC first determines the cost main body and cost object, and finds the activity between cost main body and cost object that can relate them to each other, then distributes the expense from cost main body to cost object according to the cause of cost in the activity so as to objectively reflect the real cost of products and provide reliable basis for such decision as product line decision, order decision, price decision, developing and servicing client.In this paper H Furniture Manufactory is chosen as the example. ABC is applied to the manufactory after a great deal of on-the-spot investigation and data analysis. This paper first points out the problems confronted by H Furniture Manufactory and the urgency of applying ABC through analyzing the opportunities and challenges before furniture manufacturing enterprises under the fierce competition condition, expounds the related theories of ABC from the aspects of background, representing thought, concept system, calculation principle and application status, etc, and then applies ABC to H Furniture Manufactory and makes a detail discussion of the implementation process from following aspects: the preparations for carrying out ABC, implementation scope design of ABC, accounting steps, comparison between ABC and traditional costing methods, methods to solve problems by using ABC, finally, summarizes the application of ABC to H Furniture Manufactory, and gives some suggestions of applying ABC with hope of helping enterprises to perform cost accounting and make corresponding decisions by using ABC.