Research On Application Of The Activity-based Costing In XN Company

As productivity grows,a lot of advanced equipment is widely applied to the production environment of wind power equipment manufacturing enterprises,which greatly changes product cost structures.At the same time,as product demand becomes diversified,the mode of production has been transformed from huge-batch unitary-breed to few-batch multi-breeds,which causes indirect cost among the total cost to increase gradually.Therefore,the traditional cost accounting method which is based on the indirect costs accounted for a smaller proportion is not able to reflect the cost accurately,and cannot satisfy leaders' information requirements to cost management.XN company as the biggest wind power equipment manufacturing enterprise in Xinjiang Uygur Autonomous Region,in the production process of wind turbine tower in a higher mechanization degree,but still use the traditional cost accounting method,resulting in cost accounting results is not accurate,cost information is not true,then unable to provide correct guidance to enterprise on production decision and product pricing decision.In order to meet the requirements of the company's internal management and deal with the increasingly fierce competition environment,cost accounting methods need to be transformed in time.XN Company introducing the activity-based costing method,different from the traditional cost accounting method is that,Activity-Based Costing in accounting process adopts different cost allocation criteria according to the production characteristics,so that the collection of cost information more accurate,the problem of unreasonable distribution of indirect cost under the traditional cost method can be solved.This article is exploring the activity-based costing and looking for something referable by studying the principle of activity-based costing and the process of it in products cost accounting.By means of analyzing the general information,the internal structure,the production process of fan tower and the cost composition of XN Company and the current status of cost accounting,it is found that XN company just uses the single labor hours to allocate the indirect cost and does not consider other problems such as the complexity of technology of different products,there are problems such as inaccurate cost accounting.According to analyze the current status of cost accounting,this article also discusses the feasibility and the necessity of introducing activity-based costing of XN Company.Through the analysis of the production process of XN company,we can divide theactivities and confirm the operation center and cost driver,and select four products of XN Company as the objects and re-accounting their costs according to the accounting procedure of activity-based costing,which shows that there are differences between product cost when adopting two kinds of accounting methods.In contrast,activity-based costing can allocate the indirect cost much more fairly and reasonably and provide much more detailed cost information,is conducive to the company to develop a reasonable product price and make the right production and business decisions.At last,based on the use of activity-based costing in XN Company,this paper summarizes the difficulties faced by XN company in the future,and puts forward the corresponding measures.Activity based costing can make up for the defects of traditional cost method,can provide more accurate cost information for the company to provide the correct guidance in pricing decisions and production decisions.Therefore,the research of this paper can provide reference for other wind power equipment manufacturing enterprises applying activity-based costing to improve the cost accounting and management decision.