Study On The Cost Control Of XY Mining Company Based On Activities-Based Costing

Since 2014, affected by the global recession, China’s domestic economic remains grim and grows slowly. There is no doubt that the coal economy has suffered significantly. It is due to the fact that the coal mining is a resources-intensive industry which rely excessively upon the increase of the coal production capacity. Constantly down-regulated energy price causes increasing in import, upgrade of energy, modification of domestic policies and so on. Those factors lead to a substantial decrease in the coal market demand. As a result, the coal price and enterprises’profit are pruned dramatically, resulting in the plundering situation of the mining industry. The ten years golden period is followed by the "severe winter". Only altering the development mode, can the coal industry comply with the trend of domestic economic structure change as well as the national new policies. In the present highly developed society where exists increasingly rat competition, the cost plays a decisive role rather than technical barriers. However, poor and coarse cost management is the problem commonly underlying in the mining industry. Meanwhile, with the rapidly changing production technology, the overhead cost consist larger part of the cost of coal, because the traditional computing method can hardly provide accurate information of the cost. Currently, in terms of cost management, problems are accumulated and highlighted and changes are in an urgent need. It is necessary to adopt a matched cost management mode, to solve the conundrum that " High yield does not make money, but low yield will lose market" and implement. Activities-based costing is helpful to address problems stated above. It helps to improve the accuracy of cost information, optimize process to achieve the cost control target. It also helps to make long-term development plan.Accordingly, this essay will build a new system of cost accounting for XY mining company and improvement suggestion will be given via the new management system. The analysis will be taken out following the principle that combines theories and practice together, so the activities-based cost would be used and associated with the coal mining industry’s features. The first part of the essay introduces the background and significance of the selected topic. In addition, it will bring forward the research pattern as well as the methods, based on the theories of the activities-based cost management. In the second part, the relevant theories and basic conception will be discussed. Part three will be first briefed about the general situation of the XY mining company. Then, it will flaw in the company’s cost accounting and management. Thereafter, the necessity and feasibility will be examined. The fourth part will introduce the activities-based cost practicing plan in the background of XY mining company. Additionally, it will test the application result and give some suggestions. The final part is the conclusion and forecast. Though the analysis and research of XY mining company, wish to provide reference to the whole mining.