JM Rare Earth Enterprise Activity-based Quality Cost Study

The position of cost of quality is increasingly important in enterprises。 In relation to the survival and development, it is a strategic issue. But many companies have not yet referred the concept of quality costs, and quality cost has no specific accounting. It is no help to improve the management of quality costs and earnings.The paper describe the background and the activity-based quality cost model has been proposed. In the JM rare earth enterprise, we analyzed actual production process, organization, the cost accounting situation, cost data and production data. After the demonstration of the data, impute and allocate the quality cost using activity-based costing and analyze and improve the quality of activity.First, using activity-based costing imputes and allocates the quality cost of JM rare earth enterprise. Divided the activity and determine activity centers, according to the company’s production processes. According to the principles of activity-based costing, divide the process into two steps. The quality cost had been allocated to products. We get the cost of every product.Second, to analyze activities of quality and made suggestions for improvement，the most important is analysis prevention activities. We have got the data of prevention activities, then analysis it got the conclusions. Using factor analysis method extract common factors of prevention activities, then do regression analysis. The quality standards as the dependent variable, the extracted common factors as independent variables, we get the regression equation. According to the information of the regression equation, analyze the relationship of prevention activities and quality. The results for the different results made different recommendations for improvement. Activities that nothing to do or negative correlation with the quality have been found, the closest activities also have been found. Improve those different activities, and put forward some different suggestions. In this paper the cost of quality of JM rare earth enterprises were accurate accounted, to fill the gaps in cost of quality of the enterprise. Provide a prerequisite of quality job management of the enterprise. Deeply analyze the prevention activities that largest in quality activities and most difficult to manage. Provided a reference of improve the quality activities and management of quality cost.