The Application Of Activity Based Costing In Winemaking Of A Company

With the continuous competition in the industry and the improvement of business management,the requirements for cost accounting and cost control are increasing.The Activity-based costing method is a kind of cost calculation method which based on activity,in which the cost of products are related to activity and the cost of activity are related to resources.It can help business calculate their product costs accurately and enhance their control ability.A company has enjoyed a leading position in the industry after decades of development,and the products are well known.However,cost control does not occupy a dominant position among enterprises of the same type.Therefore,it is an important question to think about how to improve the level of cost control.In addition,company has always attached importance to cost accounting.The premise of implementation of ABC has been met which is complete infrastructure and qualified personnel quality.Thus this paper is about the application of ABC in A company.Based on the review of the theory and literature of ABC,this paper discusses the feasibility and necessity of applying ABC to A company.According to the basic principles and ideas of ABC,the process flow was re-arranged,the cost pool was set up,and the cost drivers were analyzed.Based on this,a workshop was chosen to calculate the cost by ABC and we compare the difference between the ABC method and the traditional cost method.Then we discuss the advantages and disadvantages of the ABC method.Further more,we adopt TDABC to calculate the cost again and it was been proved the TDABC is more cost effective.In the end,the paper put forward the problem should be considered on the application of TDABC,pointing out that it can be combined with a variety of management methods to improve the quality of management decision-making.This study found that both ABC and TDABC can accurately calculate the cost of the enterprise and the error can be acceptable.For A company,the difference of traditional method and ABC is mainly reflected in the categories rather than the allocation of overhead costs.But according to cost-effectiveness principle,the TDABC is more suitable for the enterprise.Accurate cost accounting help managers improve the management decision-making of the enterprise,make the pricing decision,profit analysis and budget of the enterprise.Further more,it can help business to control its cost so that the enterprise maintains the dominant position in the competition.