The Application Of Activity-Based Costing Method In SH Aluminum Foil Manufacturing Company

Since China became a member of WTO at the beginning of the 21 st century,the domestic economic market was increasingly fierce competitive,so the great challenges were facing by the enterprises.Moreover,the current competitions among the enterprises are aimed at the innovation of products and quality of services instead of just focusing on the simple products and services.Nowadays,people are not only considering about the quality but also caring about the safety and other characteristics of the products;therefore,they pay more attention on the packaging,which cause the rapid growth of the packaging industries.Especially in some countries who set the sustainable development strategies like China,because they concern more about traditional culture,focus on food safety,try to protect environment and save energy.In order to stand in the market economy,the basic theories for the enterprise are trying to ensure the quality of products as well as maximum profit through controlling the cost.With the development of global economy and industrialization,the technologies such as machine automation has been continuously improved;then the cost of wages drops directly,meanwhile,the proportion of fixed assets arises and the industrial structure improves and updates.Obviously,the traditional cost-sharing method which based on the amount of products,labor hours and machine hours is unable to accurately calculate the cost of the manufactured products;in another word,this approach has the disadvantages of computing costs and benefits.The inaccurate results will have a poor effect on both long-term and short-term development strategies for the enterprises,and will finally lead to the decline of the overall level of profits.Thus,compared to the traditional cost-sharing approach,the activity-based costing method solves the problem more accurately.The method of activity-based costing plays a vital role in helping to comprehend the company's financial statement by calculating the costs of products and to establish development strategies.On the conclusion,the activity-based costing method can help companies to compute the costs and revenues,figure out and fix the existing problems,and reduce the risks.Based on the two-month period research and the analysis of the SH Aluminum Foil Manufacturing Company,this project will analyze both advantages and disadvantages of the activity-based costing method.The introductions of the whole project are as following.First,I will analyze and summarize the status development of activity-based costing method both inside and outside China.Then describe the basic concepts,characteristics,and calculations of the activity-based costing methods.Next,illustrate the SH Company's current procedures of production and operation,management of costs,as well as existing problems.Aiming at the problems such as incorrect cost accounting,unclear auxiliary expenses accounting,and irrational indirect expenses' distribution,the special implementation will be designed for the SH Company.Finally,explain the differences of the costs by comparing the results of using the activity-based costing method to the original ones and figure out the reasons that cause the differences.Moreover,organize the main points of the reasons so that we can provide the both short-term and long-term goals for the company.