Error Modeling And Analysis For Costing System Based On Difference In Resource Consumption

Through years of development, cost management has been more mature. But today people demand for many kinds of products, production sector has become more variety and small batch, it is an important issue to be solved that make cost information more accurate.A better approach is activity-based costing at present. Recent attention has focused on the design of cost system to improve the accuracy of product cost. People care little about error analysis of activity-based costing. The research of error cost in our country is less by far.This paper clarifies the concept of measurement error, aggregation error and the diversity in resource consumption patterns in the cost systems. According to the accounting logic of activity-based costing, this paper builds the benchmark calculation model. The measurement error and aggregation error are introduced to benchmark model through error matrix. When measurement error and aggregation error appear in the cost system, we calculate the formula of the total error, respectively. Activity-based costing in the implementation process depends on the actual situation of enterprises or the design departments, companies have different levels of resource consumption patterns. Some academics think that when there is high diversity in resource consumption patterns, costing systems are more sensitive to errors, and costing systems are more unstable. We use the mathematical model to derive quantitative relationship of the measurement error, aggregation error and the difference in the resource consumption patterns. Through comparing, we obtained how the various factors took into account impact on the robustness of the cost system, and different resource consumption have a different impact on the accuracy of the product. For example, as the diversity in proportional resource usage increases, the robustness of cost system grows worse, and the cost system gets more unstable. As the difference in the dollar size of different cost pools increases, the robustness may not get worse. The results lay the theoretical foundation for the accurate cost information, and can make up for existing conclusions ambiguity. These results can provide a reference when enterprises implement the costing system, such as, how companies evaluate their cost systems, improving which areas can improve the stability of the cost systems, and how to effectively reduce overall error in order to get more accurate cost information. In the background of product demand diversification and cost information complication, the practical significance of this study is also particularly important.