What Are the Best Tips for Implementing Activity-Based Costing?

Modern management science defines ABC cost method as "activity-based cost management". ABC cost method is a quantitative management based on the main characteristics of things such as economics and technology, using mathematical statistics methods to carry out statistics, ranking and analysis, grasping the main contradictions, distinguishing between key points and general ones, and thus adopting management methods differently. method.

ABC cost method

ABC cost method

Difference from ABC Management Law

Activity-based costing is not only a

Cost method is activity-based cost management

So, what is activity-based cost management?

(1) Homework

A job is a process or program that requires an operation and therefore consumes resources. For example, calling a supplier to order is an operation.

(2)

ABC analysis process

The process of ABC analysis is:

1. Define the business and

ABC analysis steps

The implementation of activity costs generally includes the following steps:

(1) Set the objectives and scope of the implementation of the activity-based cost method and form an implementation team;

The implementation of ABC must have a clear goal, that is, how decision makers use the information provided by ABC calculations. Implementation scope is the implementation of activity costs

An agricultural machinery factory is a typical state-owned enterprise.

The role of ABC analysis

Although the ABC analysis method can also be used as an accounting system, analyzing its profitability at a specific point in time is its real role. As cost drivers and business operations change, in order to ensure that past data and analysis results remain valid, ABC analysis also needs to be revised regularly. Such revisions should promote changes in pricing, products, customer focus, market share, and other strategies, thereby increasing corporate profitability.

Application of ABC cost method in enterprise logistics cost accounting and management 1. Significance and status quo of logistics cost research Logistics cost refers to products in the physical movement process, such as packaging, loading and unloading, storage, distribution processing, logistics information and other links Human, financial, material and total expenditures. Improving the internal logistics of enterprises and increasing profits have become the hotspots and priorities of today's enterprise management, known as the "third source of profit." So how big is this gold mine? How to fully mine this gold mine has become a problem that enterprises are paying close attention to today.

The rise of logistics technology in Japan in the 1950s has formed a complete system that has evolved from focusing on functions to focusing on costs and then to services. Logistics cost management has always been valued by the Japanese logistics industry, and in the long-term development, logistics costs and financial settlement systems have gradually been linked. Professor Tang Zefeng of Kanagawa University believes that the logistics cost management in Japan has gone through four stages, and the logistics cost accounting and management of Japanese companies basically stay in the third stage.

China introduced the concept of logistics from Japan in the early 1980s, and a boom in research emerged. In the process, from simple imitation to independent innovation, the logistics field has contributed to cost savings for enterprises. However, logistics cost management has not always had a complete system, which is mainly determined by the complexity and strong relevance of logistics costs. Judging from the generally low level of logistics management of Chinese enterprises, at this stage, some advanced enterprises need to solve the accounting of logistics costs and gradually establish a logistics budget system.

2.ABC cost method overview

The birth of ABC cost method can be traced back to the outstanding master of accounting in the 20th century, American professor Eric Kohler. In the "Accountant's Dictionary" edited by Professor Kohler in 1952, he first proposed the concepts of homework, homework account, and homework accounting. In 1971, Professor George Staubus in ActivityCosting and Input Output Accounting (ActivityCosting and Input Output Accounting) on the concepts of "job", "cost", "job accounting", "job input-output system" A comprehensive and systematic discussion was made. This is the first invaluable work on theoretically studying activity accounting. However, at that time, the activity-based costing method failed to attract enough attention in the theoretical and practical circles. Robin Cooper, a young scholar at the University of Chicago, and Robert Skaplan, a professor at Harvard University, noticed this situation. After investigating and researching American companies, he developed Stubbs' ideas and proposed an assignment-based approach. Cost calculation (1988) (ActivityBasedCosting, referred to as ABC method). Activity-based costing has received widespread attention in the past 10 years. New-type consulting companies have expanded the scope of application of activity-based costing and developed corresponding software.

The ABC cost method introduces many new concepts, showing the relationship between concepts in activity costing. Resources are allocated to activities or activity centers by resource drivers, and activity costs are allocated to products by activity drivers. The resources allocated to the job constitute the cost element of the job, multiple cost elements constitute the job cost pool, and multiple jobs constitute the job center. Cost drivers include resource drivers and activity drivers, which are the basis for allocating resources and activity costs, respectively.

3. Activity-based cost analysis (ABC) is considered to be the most promising method for determining and controlling logistics costs.

First, traditional costing methods have led to the so-called "logistics iceberg theory." Under normal circumstances, in the enterprise accounting subjects, only the expenses paid to external transportation and warehouse enterprises are included in the cost. Actually, these expenses are like the tip of the iceberg in the entire logistics expenses. Because enterprises use their own vehicles to transport, use their own warehouses to store goods, and their own workers for packaging, loading and unloading, etc. are not included in the cost of logistics account. Traditional accounting methods do not show various logistics costs, and there are many deficiencies in identifying, classifying, analyzing, and controlling logistics costs.

Second, under the characteristics of modern production, the logistics cost provided by the traditional logistics cost calculation method is distorted in many places, which is not conducive to scientific logistics control. Modern production is characterized by complex production and operation activities, diversified product variety structures, and varied production processes. Preparations for adjustments often occur, which greatly reduces logistics costs that have nothing to do with ordering operations, material handling, and maintenance of logistics information systems. Increased, all resources invested increased exponentially. Based on this unconscious assumption, the cost-related allocation basis is generally used in cost calculationsdirect work hours, machine hours, material consumption, and so on. This is the origin of the so-called "quantity-based costing". This kind of calculation method makes the cost card of many logistics activities out of control, causing a lot of waste and the decline of logistics service level. This kind of crisis is not obvious in traditional manufacturing enterprises, but in advanced manufacturing enterprises, it is deadly today in the high-tech era.

Third, traditional accounting practices often do not provide sufficient material flow. (1) Traditional accounting methods cannot meet the requirements of logistics integration. Logistics activities and many of the costs incurred are often incurred across departments, while traditional accounting mixes various logistics activity costs with other activity costs and aggregates them into forms such as wages, rents, depreciation, etc. This aggregation method cannot Identify operational responsibilities. (2) There is a problem with the cost allocation rate of traditional accounting subjects. The costs of traditional cost accounting are separated from the logistics costs, which are usually separated according to logistics functions. However, there are many problems in the distribution of logistics costs, and it is difficult to subdivide them for individual activities. For example, the labor cost distribution rate is difficult to determine because everyone's energy spent on logistics activities is difficult to estimate. (3) Traditional accounting methods cannot perform logistics cost accounting for logistics and supply chain transformation engineering activities. In summary, several amendments to traditional accounting are needed to track logistics costs. The flow of logistics in the supply chain is a process that combines value addition with cost increase. Completing a logistics operation or activity can increase the value of a product or intermediate product, and at the same time, the cost of the product increases. The activity cost analysis method is one of the practical tools to remove invalid costs and reconstruct the entire logistics management process in the entire logistics management process of manufacturing enterprises.

4. The theoretical basis of ABC cost method applied to logistics cost accounting activity cost method The theoretical basis is: product consumption operation, operation consumes resources and causes costs. The activity cost billboard breaks through the boundary of the product, and deepens the cost accounting to the activity level; it collects costs on the basis of activities, and allocates the costs of the activity or activity cost pool to the products according to the activity drivers. Therefore, the application of activity-based cost accounting for enterprise logistics and further management can be divided into the following four steps:

(1) Define each operation involved in the enterprise logistics system. Jobs are units of work. The type and quantity of jobs will vary from enterprise to enterprise. For example, in a customer service department, the tasks include processing customer orders, solving product problems, and providing customer reports.

(2) Confirm the resources involved in the enterprise logistics system. Resources are the source of costs. The resources of an enterprise include direct labor, direct materials, production maintenance costs (such as the cost of purchasing personnel's salaries), indirect manufacturing costs, and costs outside the production process (such as advertising costs). The definition of resources is based on the definition of operations. Each operation must involve related resources, and resources that are not related to operations should be excluded from logistics accounting.

(3) Identify resource drivers and allocate resources to activities. Homework determines the consumption of resources. This relationship is called the resource driver. Resource drivers link resources and activities, and they allocate resource costs on the general ledger to activities.

(4) Identify cost drivers and allocate operating costs to products or services. The activity driver reflects the logical relationship between cost objects and activity consumption. For example, the product with the most problems will generate the most customer service calls. Therefore, according to the number of telephones (the activity driver here), the activity cost for solving customer problems is allocated to the corresponding Products.

5. Enterprise logistics cost accounting practice Enterprise logistics cost analysis is mainly applied in three aspects: enterprise logistics diagnosis, enterprise logistics process reengineering, and enterprise financial management. Provides a benchmark for companies to implement the ABC cost method, allowing companies to compare gaps with best practices and identify goals.

According to the actual development of logistics cost of Chinese enterprises, to implement ABC cost accounting and management project, we must first change the traditional accounting cost to ABC cost. Taking a typical manufacturer's supply logistics accounting as an example, this problem is further explained. This is an auto parts manufacturer, some raw materials need to be imported. After China's accession to the WTO, automobile prices are under pressure, and we hope to explore the potential of cost reduction through the calculation of logistics costs. In the original accounting system, logistics costs could not be directly obtained, so we used ABC activity costs for accounting.

(1) Define each operation involved in the supply logistics system

(2) Confirm the resources involved in the enterprise logistics system

(3) Identify resource drivers and allocate resources to activities. Taking labor costs as an example, assigning them to each activity cost pool can select man-hour as a resource driver.

(4) Identify cost drivers and allocate operating costs to products or services. Take the purchase cost pool as an example. When assigning it to each product, the proportion of purchase materials in each product can be selected as the cost driver.