Activity-based Costing In Management Accounting

With the global competition becoming tenser since 1980's, modern sophisticated technology has been widely used and greatly developed, which leads to the radical change of the outer and inner environment of enterprises. Consequently, the traditional management theories and methods are challenged and traditional management accounting is no longer suitable to the new environment. Relativity between the information it provides and the enterprise management decision making is decreasing. The change of outer environment and the need of enterprises facilitate the development of activity-based costing (ABC). ABC reformed the division methods of manufacturing expenses. Activity analysis can eliminate "non-value-added activity" as much as possible, improve "value-added activity", optimize "activity chain" and "value chain". And by enhancing the accuracy of cost information and the effectiveness of enterprises' decision-making, plan and control, ABC can enforce the competing ability and earning ability of enterprises and make devotion to the value adding.Recently, there are lots of discussion about ABC which attracts the attention of many enterprises. But the practice of ABC is still limited. It restricted the development of ABC in China and weakened its strengths. The writer tries to discuss the use of ABC in management accounting (MA) in order to provide valuable thoughts to the development of MA both in theory and in practice. The paper makes further discussion in these respects, i.e. the basic principle of ABC, the possibility of using ABC in MA, the specific use of ABC in MA, relative problems about the use of ABC in practice .