Research On Production Cost Control Of DY Company

Since China’s reform and opening up, the status of China’s manufacturing industry has not only remained prominent, but also kept the rapid pace of the development. From the beginning of reform and opening up, the global market share of manufacturing has changed from less than 2% to more than 30%. The future of the situation can be more optimistic forecast.In recent years, with the the support of policy and development of economy, the amount of SEMs in China has been increasing steadily, which promotes the continuous development of our national economy. However, the production cost of these SEMs are always very high, reaching more than 75% of product cost. Due to their own inherent flaws, such enterprises usually have problems in the production cost control, for example, weak awareness of production cost, inadequate production cost control mechanisms, simple process and so on. To a certain extent, those flaws hinder the development of such enterprises. To these SMEs, the basic business activity is the production, so they should regard cost control as a core to increase economic efficiency and develop constantly.DY company, acting on behalf of small or medium manufacturing enterprises, is specialized in the production of ultra-precision hybrid ceramic bearings business. In recent years, its pace of development is rapid, but there has been a lack of production cost control. From 2011 to 2015, the company’s production cost increased year by year, from about 3.85 million to about 5.12 million, but the profit was declining. the cost profit ratio decreased from 32.60% to 17.15%. The growth rate of cost has exceeded the growth rate of profit, so cost control is imperative. The paper combines the theory and practical problems in the production cost control of DY company and analyzes the reasons for these problems and proposes solutions in order to strengthen its control over production cost, enabling the company to better development. The paper will be divided into five parts:The first part is introduction. Mainly elaborates the research background and significance, the research content and methods.The second part is the related concept and the control methods. Mainly elaborates the meaning and structure of production cost, the meaning and content of production cost control and target costing.The third part is the situation of cost control in DY company and problem analysis. Mainly elaborates the introduction of DY company, its production cost control status and problems of production cost control.The fourth part is the reason analysis of production cost control in DY company. Focusing on the company’s weak bargaining power in purchasing materials and, imperfect raw materials procurement procedures, the lack of training for production personnel, the technological backwardness of production equipment and focusing on products’ performance more than their production cost in design stage.The fifth part is proposals of production cost control in DY company. Such as improving the purchase process, emphasizing on staff training, strengthening the management of production equipment and using target costing in order to control production cost.