Order Cost Under The Concept Of Activity-based Costing

Activity-based Costing (ABC) Method is a study in accounting being concerned by the world. This thesis puts forward some original views after studying a large number of research achievements in this domain. Main original views is as follows:1. Concept of "order-cost" is put forward based on which manufacturing-cost and servicing-cost are unified, and from this scientific situation is created in which Manufacture-Industry and Service-Industry can apply ABC with united rules. Application of ABC provides foundation on which companies can follow, run and check the whole process of orders, and can make correct price-decision of orders. So it adapts to the changing situations of modern Industries.2. Analysis on the stimulus of static expense is given which considers that stimulus of static expense is for gaining orders and earnings, which is similar to that of changeable expense, so static expense should also be included in Cost-Accounting. It also expounds distribution of static expense to cost, and poses two methods: actual distributing and quota distributing.3. The significance of ABC for project-management and forming reasonable price-system is elaborated in this thesis. The rooted idea of ABC is the same of project-management, so ABC can be applied in any project, for example, an order, for financial analysis. This promotes that progress of ABC should unify with project-management. As ABC extends the scope of cost, abandons marginal-profit method in price-decision and covers full and true cost of manufacturing and servicing, it has positive effects on forming reasonable price-system and upholding impartial competitions.4. It also expounds the drawbacks of current report mode of accounting and asks for reforms in accordance with ABC. ABC is based on the conception of project-management and order-cost, which is a dynamic, vertical mode of cost-accounting and abandons static mode, so it puts focus on the true statement of key business, and respects the rights of managers in selecting suitable method for accounting and financial expression.