A Study On Application Of Activity-based Costing In Linyi Huacheng Machinery Manufacturing Co.Ltd.

With the rapid development of economy, Linyi city of Shandong Province has graduallybecome the largest commercial city to the North of Yangtze River. Private enterprisesspecializing in manufacture are developing rapidly. Because of the expansion of productionscale, product diversification and application of advanced technology, the traditional methodof cost accounting based on materials costs and labor costs cannot reflect the cost informationcorrectly. Therefore, we must adopt a more reasonable and scientific method to makeenterprises control cost effectively and make scientific business decisions.Activity-based costing (ABC) is a kind of calculation method based on activities. Atpresent, the method has been widely used in famous enterprises abroad and some domesticlarge-scale enterprises, especially in manufacturing industry. The article analyses the presentsituation of cost management in HuaCheng Machinery Manufacturing Co. in detail and thenecessity of implementing activity-based costing and conditions guarantee, designsaccounting system of activity-based cost, puts forward to constructive opinions on difficultieswhich may be encountered in the implementation process, so as to solve problems ofenterprise production management, improve the ability to control costs and promoteenterprise’s competitive force. At the same time, the design of enterprise’s cost accountingsystem provides an improved cost management mode for private enterprises in the sameindustry of Linyi city, Shandong province.