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Analysis on influence of traditional cost behavior of activity-based costing

Author: DongYingHou RunXiaoPing From: www.yourpaper.net Posted: 2010-07-07 19:12:59 Read:

Abstract: homework cost method to work as an intermediary, the resource tracking to the job, the job cost tracking to the products, with operating motivation as the cost allocation basis, the impact of the traditional cost behavior analysis, provides appropriate Liao modern manufacturing environment is relatively accurate cost information.
Keywords: the activity-based costing cost behavior changes related to cost fixed cost decision method
Limitations of
, the traditional cost behavior analysis
One of the important theory basis of decision analysis that the cost behavior analysis of activity-based costing of majority decision model of impact is extended to the cost behavior analysis source.
Traditional cost behavior analysis to yield as the differentiation of fixed and variable costs.The cost of the product direct cost content is higher, cause analysis can more accurately reflect the cost of the cost behavior.But in the high-tech production conditions, high content of indirect costs, the state has covered the variability of indirect cost, reason can not accurately reflect the cost changes.Activity-based costing cost motivation to explain the cost behavior, cost and cost based on the motivation, cost can be divided into short-term variable cost variable cost, fixed cost, long three.Short-term changes in the cost of general in the short term changes with the product yield and change, so it still take the output as the base (such as: direct labor hours, machine hours, consumption of raw materials etc.) to belong to the cost.Long term variable cost often with operation (such as: production batch, product project) vary, so non production base (such as: Test hours, number of orders, setup times) as the cost drivers to attribution of cost.Cost behavior analysis based on activity-based costing, broaden the scope of the variable cost, more most clear the relationship between people and the output is the extension of traditional cost behavior analysis.Variable cost analysis is the premise of variable cost method, based on the cost-volume-profit analysis, at the same time, one of the cornerstone of related cost decision method.ABC expands the cost behavior analysis, so the variable cost method, the cost-volume-profit analysis and related cost decision method to produce a series of influence.
two, on the influence of variable cost method
The variable cost method with the traditional cost behavior analysis will cost is divided into fixed cost and variable cost as the premise, the fixed cost and yield irrelevant as period cost, variable cost and yield is proportional change as the cost of the product, its purpose is suitable for short-term decision-making.Proposed the cost of operation law under the production of basic variable cost concept, many do not vary with output proportional change in indirect costs can be clearly belong to the product, the product cost not only changes in the level of production, but also as the work changes, which shook the change cost method.Especially timely preparation conditions, unit type to make a lot of manufacturing costs (such as: depreciation, auxiliary production) by indirect costs into direct cost; zero inventory means the product cost and period cost tends to be consistent, the variable cost law caused a greater impact.In short, in the new manufacturing environment, the importance of the change cost method increasingly weakened, there are two main reasons: one is the total cost of manufacturing, the proportion of variable costs more and more small, in particular those of advanced technology, the variable cost is lower than 10%; two is the fixed cost period in charge processing, and does not provide a way for the fixed cost control rising.At the same time, using the activity-based costing method in a certain extent avoids the defect completely cost method, therefore, the activity-based costing method has the potential to achieve a negative history of the development of cost accounting of instead of variable cost method.

three, impact on the profit and loss analysis
The cost-volume-profit analysis is conducted on the basis of the model of cost decision analysis.The model of traditional: R=PS - VS - F
R - a pre-tax profit of P unit sales
V - unit variable cost
Sales of 5 -
F -
fixed cost
The production cost of non operating cost method, to relax the assumption of original volume profit condition, change the original volume profit model in pre-tax profits only with price, production and sales, unit variable cost, fixed cost related model, set up with the selling price, production and sales, unit variable cost, operating variables, unit cost and fixed cost, expand the range of use cost-volume-profit model.The model adapts and activity-based costing was:

R - a pre-tax profit of
P sales at
Vl - unit variable cost
5 -
, production and sales
V2....Vn operation costs per unit
S2.Sn -.
F -
fixed cost
Operating cost method, the variable cost is more accurate, the original assumption that changes in the level of production costs may be non yield fundamental changes to better explain; fixed cost content also changed, fixed costs are part of the traditional sense of the transformation is not the production of basic long-term change cost; the most prominent changes is an increase of one series of unit operating cost and variable, predict to consider the corresponding relationship between the amount of work and production by the model.
four, the relevant cost decision method complement
The relevant cost decision method is an important decision method in management accounting, it will cost and revenue associated with a decision to make decision ratio.Its main characteristics are only considered vary with the decision to ignore the cost, affected by the decision cost.The relevant cost decision analysis of traditional decision-making often fixed cost as irrelevant cost in decision-making is not considered.Based on the operating cost method, many fixed cost and yield irrelevant because originally motivation and activity-based cost related in decision-making from irrelevant cost into relevant cost, help to improve the correct cost decision-making sex, science.The traditional decision-making cost accounting hypothesis is the decision triggered cost.Activity-based costing method into the job intermediary, will cost accounting hypothesis development decision triggered operation, operation cost and cost caused, to move because the basis of cost and resource consumption work together, pointed out the influence of cost decision and how to influence the cost incurred.Therefore, in the given conditions of cost management decision, the activity-based costing method to accurately model "- what if" analysis, generate future information.
The traditional decision method assumes that the decision only on the cost impact in a short period of time, and a number of decisions are independent and do not influence each other.But in reality, the enterprise always faces many decisions, in the long run, a decision on which decision especially subsequent decision will have an impact, will also affect the cost of.In fact, some of the cost of individual decision-making is fixed, but a series of decision-making is the change in the.ABC to work as the basis, through the analysis on the relationship between the link operation can better explain the interaction and influence between the master for the analysis of decision-making, long-term strategic decision-making is the most relevant information - the long-term changes in the cost of creating conditions.
In summary, the activity-based costing has shaken the foundation of the original decision method, extend the use of many of the original decision method and model.In practice, the application of Activity-Based Costing in production decisions, pricing decision, long-term investment decisions, can provide more accuracy, timeliness, relevance information, can improve the effectiveness of decision models and methods, so as to help the enterprise optimization decision.
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