The Application On Activity-based Costing In Cigarette Manufacturing Industry

The development and application of modern science and technologies accelerate the economic and industrial development. It also brings the revolution of the enterprise environment management, which requires rapid scientific "contingency" development. The scientific management method, which became popular after the industrial revolution, is the most outstanding achievements of management reform in the 20th century. Many enterprises have made remarkable achievements by using scientific management into manufacture level.In the "knowledge economy" era, the development of the third industry and the universal application of information technology have made earth-shaking changes in terms of business operations and productions. It also has impacts on the method of enterprising management. Those changes have taken a tremendous challenge to the enterprise cost management in theory and practice. Accounting, as an important aspect of management, has to be improved to adapt the changes in the management. The invention and development of Activity-based costing, which opened up a new realm in cost accounting and management, is the outstanding performance in this reform.Activity-based costing takes a more reasonable standard to distribute cost. It will not only make cost calculating more accurate but also bring the innovation to the cost management and optimization to organization. Although Activity-based costing in the western developed countries has been deeply researched and widely used, the theory in China is still in the introduction and research stage. So far, the application on Activity-based costing in the manufacturing industry has been conducted more in-depth research and took experiments in some places, but there is no research with this method in cigarette industry. In my opinion, the cigarette manufacturing industry has made a great tax contribution to our country; so it is worth to make a research on application of Activity-based costing in the cigarette manufacturing industry.Based on sufficient investigation and analysis on the problem of the cost accounting method in cigarette manufacturing industry, this paper discusses the feasibility on the application of ABC in cigarette manufacturing industry. Then it proposes the procedure of the application of ABC and a cost accounting model. Furthermore, after testing and analyzing, the paper draws some conclusions as follows: First, cost driver and the activity cost driver should be determined reasonably. Second, the surplus activity cost should be also calculated rationally. Third, the hierarchy of cost...