The implementation of Activity Based Costing (ABC) in Chinese refining manufacturers
Table of contents
1.1 Research background
1.2 domestic and foreign research status
1.2.1 Activity-based costing development process
1.2.2 Status quo of Activity-Based Costing Development and Application in China
6 1.3 research contents
2. Related theories
2.1concept of ABC
2.3 difference between ABC and traditional costing
2.3.1. Different calculating targets
2.3.2 Different calculation
2.3.3. Different Finished goods costs term
3. Research methodology
3.1 case study
3.2 The survey method
4. Research Results
4.1 problems of traditional costing method in oil refining enterprise
14 4.2suggestions for Chinese enterprises’ application ABC
1.1 Research background
With the rapid development of the national economy, enterprises’ competition is increasingly fierce; many companies are using advanced science and technology to achieve competitive advantage in the market. Market competition and technological progress are the two fundamental economic factors which generate activity-based costing. Since The beginning of 1980s of the 20th century, the activity based cost method is paid a wide range of attention; the developed countries gradually adopt it in a number of advanced enterprises, and it continuously develops in the practice.
Traditional Costing emphasizes on the accounting and control of the direct materials and direct labor and other direct costs, while for indirect costs it uses the single number standard as the basis for the allocation. In the case that products variety is single, the proportion of indirect costs is smaller, and it still can provide more accurate cost information. However, when there is significant change in cost structure, the traditional number basis cost can not accurately reflect the product's consumption, which is bound to lead to the cost information distortion, which will evidently cause the errors in decision-making for business. So to change the inappropriate method of calculating of the cost and to use the new approach has been very necessary.
At the same time, technological development for the implementation of activity-based costing provides a possibility, because the activity based cost method is a very time-consuming and complex system. The most difficult of the process of implementation of activity-based costing is to collect information for the system. Traditional manual collection and processing of information obviously can not meet the actual needs. Computer technology advances and cost management is applied in a wide range, which provides possibility in order to address these problems.
With China's accession to the WTO, oil refining enterprises are facing new and more complex environment for the development of competition in the market. Domestic petrochemical market has gradually become the open market; price and service have become the two major magic weapon for market competition. Faced with fierce competition in the market, only through the optimizing allocation of resources, system restructuring, technological innovation and strengthening management, to do everything possible to reduce costs, and to improve service quality, can gain a competitive edge in the competition and keep Invincible.
In order to adapt to the new situation, China's oil refining enterprises through reorganization of assets establish the China National Petroleum and China Petrochemical these two Group Company, and successfully listed on the domestic and foreign security markets. With ultra-large-scale group strategy they obtain competitive advantage. At the same time they use laid-off, divest non-major assets, streamline operations and expand the terminal means of sales. This internal re-structuring reflects the ultimate efficiency in order to lower costs. But...
Bibliography: Cooper R．Kaplan,R．S．Maisel，L．S．Morrissey,E．＆Oehm,R．M., 1992,
“From ABC to ABM，”Management Accounting，(November 1992b)
Yu Xuying, 1994, the outline of new management system in the core of ABM, the journal of contemporary finance, (4): 25-29
George Foster, C．T．Horagren, 2007, Cost Accounting and Cost Management Issues．This Century and Beyend, (2)：61-68
W Foster, K. (2006). Guide to esssy writing. Retrieved November 16, 2015, from
L．CtVargas, 2007, Uncertainty and Rank order in the Analytic Hierarchy Process．European Journal of Operation Research，4：107-117
Salafatinos, 2005, Integration the theory of constrains and activity-based costing．Journal of Cost Management, 9：21-30
Johnson，H．T．and Kaplan，R．S, 2006, Relevance Lost：The Rise and Fall of Management Accounting．Harvard business School press
Robert．S．Kaplan, 2007, In defense of activity-based Cost management．Management Accounting．November：58-63
Robin Cooper, 2000, Five steps to ABC system design．Accountancy, November：78-81
Robin Cooper．1990,ABC：a need not a option．Accountancy, September：86．88
Robin Cooper and Robert S．Kaplan．1988, How Cost Accounting Distorts Product Costs．Management Accounting，April：20-27
J．Innes．E Mitchell, 1997,Survey research on activity based costing：a reply tO Dugdale and Jones．Management Accounting Research．241--249
Srikant．M．Datar．Sunder Ketre．1993, Simultaneous of Cost Drivers．The Accounting Review．Vol 68,No．3 July．563-575
Nicholas Dopuch, 1993, A prospective on Cost Drivers．The Accounting Review．V0168,No-3 July: 615-620
Please join StudyMode to read the full document