Applied Research On Activity-Based Costing In H Iron And Steel Enterprise

Cost is the lifeline of enterprise, in order to maintain favorable positions in theincreasingly fierce market competition, enterprises need to pay attention to cost and study itsvariation. Since1980s, highly automation based on high-tech dramatically has changed thecost composition. The direct material costing and the direct labor costing have beendecreasing in the share of cost and the proportion of manufacturing costing has beenincreasing substantially. At the same time, product market dominated by buyers rather thansellers, consumers need more personalized products. This situation made the traditionalcosting method based on number was no longer applicable. The outcome of the traditionalcosting method not only be distorted, but also mislead managers to make wrong decisions.After the2008global economic crisis, the iron and steel industry suffered a serious blow. Onone hand, quantity demand of steel was reductive massively, on the other hand, raw materialprices were increasing. How to help the iron and steel industry out of the woods is a new topicwhich we need to research.Firstly, this paper reviews the background and significance of activity-based costing,introduces the research status, briefly discusses the research ideas and methods. Secondly,outlines the theoretical research of activity-based costing, introduces the theory from thefollowing aspects: fundamental, accounting steps, differences between activity-based costingand traditional costing method and the misunderstanding about activity-based costing. Thirdly,describes the current status of H iron and steel enterprise, indicates the current costingproblems and puts forward the necessity and feasibility of the implementation aboutactivity-based costing. Fourthly, takes an example of first steel mill, designs the specificprocesses according to the actual production conditions. Then compares the outcome ofactivity-based costing with the outcome of traditional costing method, analyzes thedifferences and sets up a performance evaluation system. Finally, concludes the mainconclusions and suggests related suggestions according to above analysis to promote theimplementation of activity-based costing in H iron and steel enterprise.