Application of activity-based costing

[Abstract] the cost of operating cost method can improve the accuracy of cost accounting and cost control effectiveness. In this paper, the first fermentation workshop Z laboratories an example, the Application of activity-based costing, and accordingly The Application of costing a preliminary assessment of the effects of its proposed cost control and enhanced the feasibility of proposals.

[Keywords:] ABC; cost object; cost drivers; Application

First, the introduction of activity-based costing

Laboratories located in the city of Z H, has been appraised as "China's 500 large enterprise groups." However, in recent years, with the pharmaceutical manufacturing industry group H City, the rapid rise of the factory in the city is facing a lot of strength H is strong competition from peers. So Z Pharmaceutical expectations in cost management, activity-based costing attempts to improve cost management, to seek the cost of competition in the market lead. The plant history of management reform on many occasions in the first the first test of a fermentation workshop, then successfully extended to the whole plant other plants, so ABC is ready to try in the workshop. The first fermentation strong shop floor automation, and many aspects of technology does not require a fixed operations staff. operatives focused in the fermentation, LF extraction, LF fine, drying, packing and other technology areas. shop maintenance activities by the machine shop to complete. The workshop mainly produces LF, MF, PF, JQ 4 kinds of products, while, according to customer needs, the above 4 re-treatment products, in addition to the workshop charged with providing the first synthesis of fermentation services, production LP. the workshop work better cost accounting basis, management is standardized, for the implementation of operating cost method provided the conditions.


Second, the division operations center and determine the cost objects and cost drivers

Successfully applied to the cost of operating cost method, the first fermentation workshop must complete the following preparation.

(A) determine the final cost objects
According to the first fermentation workshop production tasks, the final cost of the first fermentation workshop subject identified as: LF, MF, PF, JQ, LP, LF re-treatment, MF re-processing, PF re-processing, the final cost of the subject 8.

(B) the division operations center and operations center to determine the cost and the cost drivers underlying
1. Division operations center and to determine the cost of the center of the subject
Benefit from the cost accounting and cost control guidelines, combined with the production of the first fermentation plant and process characteristics of organizational characteristics, work activities will be the first fermentation workshop is divided into six operational centers, and to determine the centers of the cost target. (1 ) Fermentation Center: The bacteria were one, two, three fermentation, for the extraction, spray drying are links to provide raw materials. cost target for the LF, MF, PF, JQ, LP, etc. broth. (2) LF and MF extract the center: the fermentation center moved over the LF, MF puree drying, extraction, filtration, concentration, bleaching, extraction of active ingredients to form a crude product. cost target for the LF, MF and other extraction of crude product. (3) PF extraction Center : The fermentation center shifted to the PF puree drying, extraction, filtration, concentration, bleaching, extraction of active ingredients to form a crude product. cost target PF extraction of crude. (4) JQ Operating Centre: fermentation center moved to the JQ original pulp drying, extraction, filtration, concentration, bleaching, extraction of active ingredients, to form finished products. JQ product cost target. (5) LF and MF Fine, drying, packing center: on the LF, MF crude to refined production, drying, packaging, and the re-processing. cost target for the LF, MF products, as well as re-treatment LF, MF re-processing. (6) PF fine baking bag Centre: PF crude to refined production, drying, packaging and handling the re- . the cost of products subject to PF, PF re-processing.

2. Establish the motive operations center cost allocation
Using SPSS statistical analysis software, the first fermentation over the past 36 months the cost of data analysis workshop, combined with the recommendations of technical personnel of enterprises, the various operations center to determine the operating cost drivers in Table 1.



Third, the Application of activity-based costing method to calculate the cost of the first fermentation workshop

Calculate the cost of completion of preparatory work before work, you can apply to the first fermentation costing cost job shop spreadsheet (data for the year 2007 cost data). To make the calculation simple, omitted a list of formulas that the direct operation.

(A) of the operating costs of the centers imputation
According to information provided by the Finance Ministry, the use of the relevant mathematical model, computing resources to complete distribution rate, distribution of resource costs, imputation operating costs and so on. Operating cost collector results in Table 2.

(B) the allocation of operating costs (operating cost is about the various operations center cost center assigned to each subject)
1. Fermentation Center operating cost allocation (Table 3)
Links to Research Papers Download http://www.hi138.com (c) imputation of the product and calculate the cost of the product operating cost of the finished product
1. Assigned direct material costs (Table 9)

2. Calculate the total cost of finished products, and unit costs
The center of a variety of products from every job assigned to the "operating costs" and the consumption of "direct material costs," a summary of a variety of finished products is the "product operating costs." Combination of product output, the unit can be obtained cost (see Table 10).


Fourth, the first fermentation workshop Application effect of Operation Cost

(A) the accuracy of the analysis
Costing spreadsheet application, we found that in 2007 the first fermentation workshop cost for each product there is a big distortion. And the cost of traditional cost method (due to space constraints, this is no longer a list of instructions, interested readers can according to our The data itself projections) compared to the unit cost of all the products are different from the real costs. These differences will increase as production increases. especially the LF, is the largest production of several products in the product, the cost of more Big inflated, will easily make mistakes in business decisions. to analyze the information currently available, at least the following reasons why the cost of distorting the first fermentation workshop: First, MF heavy handling, fermentation and other centers, but by the traditional method, but also operations center will be has not been the indirect cost allocation to the product. Second, only after fermentation LF, LF extraction, refinement, drying, packing and other processes, but all share the process of indirect costs. Third, LF re-processing, PF re-treatment, even calculated the cost of materials only, without considering any other indirect costs, resulting in a serious virtual re-processing cost reduction. Fourth, JQ originally belonging to proprietary equipment, but for other products to share their indirect costs such as depreciation, resulting in virtual cost less serious. Fifth, the smallest difference in PF, but still bear the indirect costs that should not be assumed.

(B) cost control and analysis
In the operating cost, due to the production of the first fermentation workshop is divided into the centers, so you can more clearly grasp the work activities of resource consumption, analysis of the root causes of increase or decrease the cost to take effective corrective measures, for example, all products are part of the fermentation, the fermentation of cost control will undoubtedly become part of the key points. LF and MF extraction centers consume more resources, more attention should be. the assessment more clear, more reliable basis for rewards and punishments, rewards and punishments are incentives more remarkable.


[References]
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[2] Wang Jianli, Yang Rong this. ABC to the application of barriers in China [J]. Accounting Monthly, 2008 (3).

[3] Jiang Ning, Ning Liangrong. Advanced manufacturing cost of the operating system [J]. China's collective economy, 2008 (2). Links http://www.hi138.com Research Papers Download