Research On The Application Of ABC To MTO Enterprise Case Study: TN Corporation

With the forming of global market, more much competing and more demands of personal products, the way of Make-To-Stock (MTS) is changed to Make-To-Order (MTO).Because almost each order's product and cost is different and product's delivery time is short, the traditional costing (such as Standard Costing) is not fit to MTO. In addition, the indirect expense's rate in all expense is higher and higher, the traditional cost accounting is not able to describe the actual cost information and supply exact information for management. The solution is to use a new cost accounting system-Activity-Based Costing (ABC) system.According to the specialty of MTO, the article combines the ABC to the Standard Costing and application of ABC in MTO enterprise, special in Standard-Activity-Based Costing (SABC). The manufacture process is made up of activities. Defining activity and calculating standard cost of activity, the costs of activities become building blocks. The building blocks (activities) are limited, but they can assemble all types of products. Then, the cost management of mass quantity production will turn to the cost management of limited activities. The article designs the application of ABC and ABCM (Activity-Based Costing Management) in MTO and distinguishes the Au-in ABC and the Partial ABC.In this case study, the article implements the ABC in TN arts and crafts corporation, including case background, implements of ABC and ABCM and the effect analysis. The main effects of this case are to supply exact ABC information to support decision-made of order quote price and outsource price, and to reduce cost through canceling non-added-value activities.Finally, the article draws the researching conclusions and limitations, also, gives some suggestions.