Test And Optimization Of Cost Drivers

The debate on activity-based costing(ABC)method between researchers focuses on whether the cost driver selection is scientific and how to prove that ABC method is superior to the traditional cost accounting method.On the basis of the literature about cost driver optimization and case study of ABC,earlier research of cost driver optimization have focused on decreasing the number of cost drivers in ABC system in the stage of ABC design whose aim is to reduce the complexity of ABC-system and implementation cost.However,above-mentioned research rarely comes down to cost driver optimization after the implementation of ABC.The cost driver selection in the stage of ABC design consider more attainable cost driver in practice than scientificity based on the principle of cost-benefit and insufficient information of existing ABC-system.Therefore,ABC-system composed of suboptimal drivers or radically inappropriate drivers is likely to unreasonable,which is not recognized or not sufficiently recognized.These facts reduce practical effectiveness of ABC-system and increase risk of failure greatly.The whole train of thought is as follows:the first step is to test cost drivers'correlation by statistical method based on vast historical data from company that has implemented ABC-system;the second step is to choose the favorable direction and then identify cost drivers scientifically.The ultimate goal of testing and heightening all cost drivers' correlation is to improve the scientificity of ABC-system design.This paper has discussed the significance of test and optimization of cost drivers according to the literature review of ABC5s generation,development and cases;this paper also has put forward test and optimization program direct at those companies that have implemented activity-based costing,formulated the test model of cost driver,come up with optimization principles,optimization criteria and optimization methods and finally carried out case study based on historical data from HZ5s microbial pharmaceutical workshop that has implemented ABC-system for 3 years.The research results illustrate that the present ABC-system design of HZ's microbial pharmaceutical workshop is basically scientific.Targeted optimization of existing defects has achieved the goal of improving the scientificity of ABC-system.To ensure the accuracy and scientificity of cost information provided by ABC-system could improve the usefulness of cost report and lay a solid foundation for the follow-up activity-based cost management system.