The Research On The Application Of Activity-based Costing In Military Industrial Enterprises

Since1980s, China has reformed the economic system. And now, China has established and improved the socialist market economic system. With the constant deepening of the reform of the economic system of China, the reform of the national defense industry operating mechanism is developing in depth. The supply and demand of military has changed from the mandatory plan relationship to implement the national military order system; military industry also changes the nature of the institutions from the initial for the enterprise legal person. Military industrial enterprises face an increasingly competitive environment, the goal pursued by the completion of the mandatory; the outcome of the award-winning was transformed to obtaining the best interests of the target. Military industrial enterprises widely involved in the field of civilian products, in addition to operating traditional military supplies. Dramatically changed environment which faced by the military industrial enterprises, the traditional cost accounting and management philosophy have been challenged. How to update the cost management concepts of the military enterprise in order to adapt to the modern enterprise environment and continue to maintain military enterprise competitive advantage, become an urgent problem.Activity-based costing initially started in the early1940s, advanced by Eric Kohler, an American accounting scientist. In the late1980s, ABC theory has won wide attention, which owe to the research conducted by two Harvard University’s professors Robert Kaplan and Robin Cooper. In China, as the representative of a number of management accounting scholars in the early1990s, Professor Yu Xuying, introduced the ABC theory to China and conducted extensive research. Compared with overseas research, our research is lagging behind, some industries have not tried to use activity-based costing, and this thesis will explore the use of ABC in military industrial enterprises. Begin with the background of military industry’s characteristics and trends, this thesis, Firstly, describes the basic concepts and principles of activity-based costing; introduces the characteristics of the military industrial enterprises at the present stage and the outstanding problems of cost management. This thesis proposes military enterprise use ABC in cost accounting, then elaborates the above view from several aspects below:comparison between old and new methods、necessity and feasibility This paper focuses on the cost accounting of the Chemical Factory One of QY Company, after calculating the cost of the product of the above factory with ABC, then makes comparative analysis and research based on the different results calculated between ABC and traditional method. This paper also studies and analyzes problems might be encountered after ABC implemented, and summarizes the enlightenment of implementation of ABC in military industrial enterprises.This thesis contains six parts. The main contents are the followings:Section one, mainly research on the background and significance of the topic, and summarizes the researches especially on the application of ABC in the military industry. This section also describes the scope and methods of research and frameworks of the thesis.Section two. mainly elaborates related theoretical and intrudes related concepts of costing and accounting procedures, which plays a theoretical supporting role of the thesis.Section three, mainly does adaptive analysis about ABC implemented in military industrial enterprises. This section starts with the characteristics of the military industrial enterprises and costing at this stage, focuses on the necessity and feasibility of ABC used in military industrial enterprises.Section four, does case studies and establishes ABC in Chemical Factory One, after calculating the cost of production of three products compares the cost data calculated between the old and new methods. Section five, mainly analysis the possible problems may be encountered; and measures should be taken in the implementation of ABC in QY Company.Section six, summarizes and draws four conclusions.The research method of this thesis is a combination of normative research and case study. The theoretical part is to be discussed in accordance with the relevant theoretical literature, making normative research on ABC theory in military industrial enterprises. In the case part behind, this thesis takes Chemical Factory One of QY Company for example, then designs ABC and calculates the cost of production of three products. on the basis of fieldwork and research of the workshop and in accordance with the production characteristics and business management requirements. The main innovation of this thesis is to broaden the scope of application of ABC and promote the military industrial enterprises to establish advanced cost accounting and management system.