Research On Cost Accounting Of FY Company

In the year of2002, private consumption promoted the rapid rise in demand for avariety of passenger cars. China’s auto industry entered a phase of explosive growthand the rank in global automotive industry’s position is gradually increased.Especially in2010, China government implemented the strategy of expandingdomestic demand, adjusting industry structure. The series of policies made the rapidgrowth of China’s automobile production and sales, promote the market share ofown-brand autos, resulted a further optimized market demand structure and speededup automobile industry structural adjustment. Since2011, China governmentimplemented a major automobile consumption control policy to meet the problems oftraffic congestion and gasoline shortage. On another hand, Chinese family car marketalso entered a period of relative saturation. All the above reasons make China’sgrowth of automotive industry slowdown, the automotive market trends to deserted.In the past decade, due to the rapid development of the automotive industry, manyauto companies obtained high profits relying on industry resources. But during thelow-speed development stage, companies do not have their own core competitivenessand cannot obtain excess profits, facing the danger of elimination. As a result, manydomestic automobile manufacturers reduce the cost for abtaining industry-leadingposition.FY company is a auto manufacturing enterprise staying in such a stage ofdevelopment. The company is one joint venture invested by China FAW autoCompany and Toyota Motor Company, the predecessor was Changchun Feng YueFAW Automobile Co., Ltd.,founded in July2003. The joint asset was fulfilled by Sichuan FAW Toyota Motor Co., Ltd,in2005, China FAW and Toyota MotorCorporation take50-50of the shares. FY company’s main products are high-end SUVLand Cruiser and Prius hybrid cars. In the year of2008, FY company began a newplant expansion project, that is making the new plant fully founctional in2012andintroduce new productions such as light cars Corolla, RAV4and other urban off-roadvehicle and related semi-finished parts.Facing fierce competition of today’s increasing market in auto industry and thetrend of saturating, FY, the company newly finished expansion and introduction ofnew products, is taking the burden of big challenge. FY persist the mode ofzero-distance with Toyota and commite to built a China Boilerplate Toyota plant.Imitating Toyota’s Japan model factory and other domestic joint ventures and takecost-reducing as it’s key in daily management. Toyota’s outstanding contribution tocost-reducing is Toyota Production System, the core of it is Zero Inventory. FY adoptZero Inventory when it is under slow development period and the actual facts to anew company, wishing to reach the goal of reducing cost. But, FY ignored factorssuch as local environment and staff awareness during introducing Toyota’s costmanagement, resulting bad linking between departments and processes. The ZeroInventory didn’t acquire in the term of Purchased parts. Blindly copy Toyota’sfinancial accounting method of taking data out of the library in accordance withwarehousing approach. At the same time, the introduction of new products didn’tcarry out according to the actual situation modifications, improvements, and stillusing the older costing methods. That made the costs can not be reasonably clear ofthe vehicle and the related semi-allocated, thereby affected the accuracy of costaccounting.The goal of the paper is finding the unsuitable reasons of Toyota CostManagement in FY by studying FY’s cost management, normalizing FY’s inventorymanagement accounts by Enterprise Accounting System requirements and propose suggestions for improvement to FY’s cost magement by cost accounting methodssuch as variety method or sub-step method. Pointing out that Toyota FY costmanagement in learning, while costing to combine their actual situation of enterprisesfor processing, in order to better play the Toyota management model results, whichfor the introduction of foreign advanced management experience of other companies,has a certain reference.