The Combined Application Of Standard Costing And Activity-based Costing In The Manufacturing Industry

The integration of the standard costing and activity-based costing(ABC)has become one of the hot issues attracting attention from the accounting field at present,because in the new manufacturing environment,the computer integrated manufacturing system is gradually improved,as well as the theory and application of the timely production mode,total quality management,and activity-based costing(ABC).Moreover,ABC proposes new ideas of dividing the manufacturing expenses by adopting homework thoughts,to solve the problem on irrational distribution of manufacturing costs in traditional cost methods.However,in spite of high accuracy in cost accounting,the application of ABC is limited to the division and calculation of manufacturing costs,leading to lack of analysis on cost variance and difficulty in achieving effective cost control.Therefore,it is necessary to concern how to link the standard costing and ABC,so that the integration of them can not only maintain the advantages of the standard cost system on cost control,but also highlights the accuracy of ABC in the allocation of manufacturing costs.Based on the theoretical research on modern cost accounting and management accounting,this paper analyzes relevant research results and status at home and abroad.Through careful analysis on the advantages and disadvantages of the standard costing and ABC,we found that these two methods are not completely antagonistic,whereas they can complement each other.Therefore,based on the discussions above,this paper introduces the thought of dividing the manufacturing expenses by adopting homework thoughts into the formulation of product standard cost,and proposes the integration of standard cost method and ABC method,which can retain and absorb the advantages of these two methods.Meanwhile,it overcomes respective shortcomings and makes beneficial explorations for the cost control of modern manufacturing companies and the innovation of cost management models.This paper adopts the method of case analysis,selecting the steel making branch of SC Steel Company to analyze the current status of its cost management and the problems in cost accounting,including irrational allocation of indirect expenses,ignorance of cost drivers trace ability,lack of cost variance analysis and outdated cost management concepts.Meanwhile,based on solving these problems and improving the accuracy of company SC in cost accounting,we aims at adopting core concepts of ABC in the initial management system of this company,and establishing standard ABC management system.In addition,we detail the various links and operating procedures of the standard operating cost method for the steel plant,including direct cost standard costs,the manufacturing cost based on the allocation of standard costs of ABC and the analysis of the differences between actual costs and standard costs.Besides,through the calculation results comparison of the standard operating cost method and the traditional cost algorithm,we found that the traditional cost method has a large error in the distribution of manufacturing costs,resulting in cost transfer phenomenon,which reflects the rationality of the standard operating cost method on the distribution of manufacturing costs.Furthermore,we propose the safeguard measures for implementing the standard operating cost method,such as enhancing the compatibility of the information platform,implementing the concept of cost management,and improving the organization of the company structure,strict implementation of standardized operations and improvement of performance appraisal system.Through the case analysis of SC Steel,we hope our work can provide some new ideas on the reform of cost management in China's manufacturing industry.