Study On Application Of The Activity-Based Costing Theory In T Company

Fuel-Cell and the Hybrid Electric Vehicle battery were widely applied in communications equipment, office equipment, household electrical and other industries. However, with an increasingly competition of the battery producing market, they are gradually being replaced by the better performance lithium-ion batteries. Nowadays, the market share of Fuel-Cell and the Hybrid Electric Vehicle battery decline because they were mainly used in hybrid electric vehicles, digital cameras and a small amount of household appliances T company whose main business is that the Foamed Nickel manufacture and wholesale. Foamed Nickel is the core material of Nickel Hydride Battery and Nickel-Cadmium Battery. Under this circumstance, T Company is facing intense numerous problems like horizontal competition, inefficient profitability product and company’s profits reducing. In this case, some products’ profit of T Company fluctuates in the vicinity of the breakeven point. To accurately calculate the costs became an urgent problem which needs to be solved. Nevertheless, the T company’s current traditional costing method cannot satisfied the demands in this industry which are accurate calculation of the cost and reasonable pricing requirements. Thus, the Activity-based costing method can be the best answer of the problems that T company is facing. This accounting method can refine the manufacturing overhead, thus accurate calculation of product cost, accurate pricing, improve the reliability of the budget which are the qualities that are the T company solely needs. The company’s business decision-making was extremely important, but a cost information distortion would be misleading business decisions which is exactly the T company needs to avoid.Thesis referenced a large number of research results and related theories of Activity-based costing, in-depth analysis of the current cost management status. T company current account method is varietal method, the problem which cost information distorting, product pricing distorting and traditional costing method cannot reflect cost variance of different products. Also, the necessity and feasibility of T company’s application Activity-based costing will be discussed in next a couple of chapters. The costing process which was designed basing on the ABC theory will divide T company into seven activity centers. According to the theory of ABC, principles of Activity-based costing suitable for T company’s costing processes will be a perfect macth for, by analyzing production flow chart, the is divided respectively pretreatment, nickel, sintered, inspection, slitting shears, product packaging and transportation. According to the activity centers to find a cost driver, imputation of the resource expenses, manufacturing overhead through the activity center will be allocated to the product cost, at the activity-based costing and traditional costing method compared the difference between production costs and product profitability differences and find out the reason. In order to be able to successfully implement T company costing and put forward the corresponding safeguards. The last part is the summary of the thesis, the overall content of the thesis have been summarized and analyzed the shortcomings.