How to understand the historical inevitability of the development from job costing to job management?

Activity-Based Costing (ABC for short) is a new enterprise management theory and method that was first applied in advanced manufacturing enterprises since the 1990s, after research was started in western countries in the late 1980s.

In the past one or two decades, the highly automated advanced manufacturing enterprises have emerged on the basis of the electronic technology revolution, which has brought about a great change in management concepts and technologies, and the Just-in-Time (JIT) purchasing and manufacturing system, as well as its closely related zero-inventory, unit manufacturing, total quality management and other brand new management concepts and technologies have come into being. Highly automated advanced manufacturing enterprises, to meet customer demand for diversified, small quantities of goods in a timely manner, rapid, high-quality production of many varieties of small quantities of products. In this new manufacturing environment, the traditional procurement and manufacturing process will undergo profound changes. Accordingly, the original traditional procurement and manufacturing and even corporate decision-making services for product cost measurement and control, accounting decision-making, performance evaluation and other accounting theories and methods will also undergo corresponding changes. For example, in the advanced manufacturing environment, many manual labor has been replaced by machines, so the proportion of direct labor costs have fallen dramatically, a large proportion of fixed manufacturing costs rose. 70 years ago, overhead costs for direct labor costs of only 50% to 60%, while today most companies have overhead costs for direct labor costs of 400 to 500%; in the past, the direct cost of labor accounted for 40 to 50% of the cost of the product, while today Less than 10%, or even only 3-5% of product costs. Such a significant change in the product cost structure, so that the traditional "quantity-based costing" (such as working hours, machine hours based cost-sharing method) can not correctly reflect the consumption of the product, and thus can not be correctly accounted for the benefits of automation of the enterprise, can not provide correct and useful accounting information for enterprise decision-making and control. The ultimate consequence is a decline in the overall level of profitability of the enterprise. ;

Job costing is a job-based management information system. It is centered on operations, and the division of operations is the whole process starting from product design, to material supply, from each part of the production process (each workshop), quality inspection, final assembly, to shipment and sales. By recognizing and measuring the operation and operation cost, the relative true product cost is finally calculated. At the same time, through the tracking and analysis of all the operation activities associated with the product, in order to eliminate the "non-value-added operations" as far as possible, improve the "value-added operations", optimize the "operation chain" and "value chain". "value chain", increase "customer value", provide useful information, promote the loss, waste reduction to a minimum, improve the decision-making, planning, control of the scientific and effective, and ultimately achieve to improve the enterprise's market competitiveness and profitability, increase the enterprise's The purpose of this is to increase the value of the enterprise.

The development of the traditional quantity-based costing to the modern job-based costing is a major trend in the development of cost accounting science. Because in the face of the increasing proportion of overhead costs in the total cost of the product, the increasing diversity of product varieties and small batch production market needs, in the face of increasingly fierce global competition and the elimination of trade barriers to the new market conditions, continue to use the early cost accounting to control the cost of the product under the conditions of mass production methods, with a smaller and smaller proportion of the cost of the product of the direct labor to allocate a greater and greater proportion of the manufacturing costs, allocate more and more with the cost of the product, the cost of the product is not the same as the cost of the product, but the cost of the product. Manufacturing costs, the allocation of more and more work costs (such as quality inspection, testing, material handling, adjustment preparation, etc.), as well as ignoring the batch of different products actually consume the difference, etc., will lead to a serious distortion of the cost of product information, resulting in business decision-making errors, product costs out of control. Traditional costing seems calm on the surface, but in fact everywhere hidden reefs, hidden unprofitable products. Job costing and traditional costing is different, the distribution basis (cost drivers) not only quantitative changes, but also qualitative changes, it is no longer limited to the traditional costing of a single quantitative allocation benchmark, but the use of multiple allocation benchmarks; it is not only limited to multiple allocation benchmarks, and a set of financial variables and non-financial variables in one, and special emphasis on non-financial variables (number of parts and components, adjustment preparation times, transportation distances, the number of products, and so on). , number of adjustment preparations, transportation distances, quality inspection times, etc.). This quantitative and qualitative changes, financial variables and non-financial variables combination of allocation basis, due to improve its correlation with the actual consumption of the product cost, can make the operation cost accounting to provide "relatively accurate" product cost information.

Xi'an Agricultural Machinery Factory is the first pilot enterprise selected for our research on job cost accounting. The enterprise is not an advanced manufacturing enterprise, but due to the large difference in the number of products produced (the highest number of products - four-wheeled tractor, more than 50 times the lowest number of products - sprinkler), and the ratio of manufacturing costs to direct labor costs up to As much as 200%, there are certain conditions suitable for the application of ABC. For this reason, we took the following steps in the study and analysis of the enterprise: (1) selecting the main operations; (2) aggregating the costs of resources to homogeneous cost pools; (3) selecting cost drivers and calculating the allocation rate of each cost pool; (4) allocating the manufacturing costs aggregated in each cost pool to the product according to the allocation rate of each cost pool; and (5) calculating the cost of the product. Through the study and analysis of the pilot enterprise, we come to the following conclusions: the unit product cost of the four-wheel tractor, a high-volume product representing 55.97% of the pilot enterprise's cost of goods sold and 64.39% of its production, has its cost overstated by 4% under the traditional costing method, and, on the contrary, the unit product cost of the four-wheel tractor, a high-volume product representing 10.95% of the pilot enterprise's cost of goods sold, On the other hand, the unit product cost of the 12-row planter, a low-volume product representing 10.95% of the pilot company's cost of goods sold and 2.97% of the pilot company's production, was undercosted by 21.2% under the traditional costing method. The difference is even more obvious after deducting the cost of direct materials that are directly charged to the product cost. The unit product cost of the four-wheel tractor is overestimated by 46.5% under the traditional costing method, and the unit product cost of the 12-row planter is underestimated by 42.5% under the traditional costing method. This well verifies the conclusion that traditional costing overestimates the cost of products with high production volume and low complexity and underestimates the cost of products with high production volume and high complexity, as mentioned in the theory of job cost accounting. This distortion of product costs has caused serious distortion of product gross margins and product profits, and the gross profit of four-wheeled tractors under the traditional costing method is lower than that of their actual manufacture, with the gross profit per unit of product being underestimated by $292. The gross profit of the 1,083 units of four-wheeled tractors produced during the period of l-May 1997 * * * was underestimated by $316,236 yuan. This erroneous gross profit information seriously affects managers' decision-making: first, because of the overestimation of the cost of the four-wheeled tractor, in the case of the need to reduce the selling price to increase the market share of the product, the enterprise does not dare to reduce the price, and therefore will reduce the competitiveness of the product market and lose the opportunity to expand the market of this product, thus affecting the enterprise's earnings in the current period and in the future; second, because of the underestimation of the gross profit of four-wheeled tractors, the overestimation of the gross profit of the 12-line Secondly, due to underestimation of the gross profit of four-wheeled tractors and overestimation of the gross profit of 12-row planter, in the case of the enterprise's limited production resources need to choose the direction of inputs, managers are likely to make a reduction in the production of four-wheeled tractors and increase the production of 12-row planter's erroneous decision (in fact, the correct decision should be just the opposite), which may result in the enterprise to suffer double losses, the overall level of profitability declined.

Two, job management and its practical application

To be noted that the meaning of job costing is not a simple sense of accounting calculations. ABC to "job" as the center of the management of the idea that has now been transferred from the cost of recognition, measurement of the many aspects of business management, a new modern A new modern enterprise management idea--Activity Based Management (ABM) is being formed. Activity Based Management (ABM) is a new management concept that puts the center of gravity of management deep into the operation level. It eliminates "non-value-added operations" as much as possible, improves "value-added operations", optimizes "operation chain" and "value chain", and ultimately increases "value chain". and optimize the "operation chain" and "value chain", and ultimately increase "customer value" and "enterprise value". Western countries in the use of ABC, focusing on how to implement job management through job costing. China's enterprises are currently more backward management methods, management tools, theories on how to apply job costing to improve the scientific nature of decision-making talk more about how to enter the job costing to job management to improve the overall level of management of the enterprise is not mentioned enough. In fact, the most lasting benefit of job costing is that it enables managers to know which operations are value-added operations and which are non-value-added operations; which are key operations and which are general operations; thus minimizing non-value-added operations and seizing key operations, so that the management measures taken can control costs and increase enterprise value more effectively. For example, through job analysis, managers can identify and eliminate those "non-value-added operations" and waste, and better understand the production process.

From the point of view of the essence of operations management, there are two main objectives of operations management: first, from the point of view of the external customer, try to provide more value to the customer through the operation (value refers to the amount of money that the customer is willing to pay for the products or services that the enterprise provides to them), and second, from the point of view of the enterprise itself, try to obtain more profits from the value provided by the customer. In order to achieve these two goals, business management must go down to the operational level and conduct job analysis. Job analysis includes the following steps: (1) analyze which operations are value-added, which operations are not value-added. The operations in the production process are generally value-added operations, such as mold making, casting, feeding, stamping, forming, loading, debugging and other operations in the production process of Xi'an Agricultural Machinery Factory. Non-value-added operations refer to operations that do not contribute to the increase of customer value, or operations that do not reduce the value of the product by eliminating them, such as storage, moving, waiting, testing and other operations. Managers should minimize this part of the operation. (2) Analyze the importance of operations. Enterprise operations are usually up to dozens of types, or even hundreds or thousands of types, one by one to analyze these operations is unnecessary, because it does not meet the principle of cost-effectiveness. According to the principle of importance, only those operations that are more important relative to customer value and enterprise value can be analyzed. (3) Compare the operations of a company with similar operations of other companies. Because value-added operations do not mean effective and optimal, by comparing the operations with the advanced level of other enterprises, you can determine whether a certain operation or the entire value chain of the enterprise is effective and seek opportunities for improvement. For example, product design? Taotan? κ and restoration of the perch bottom taotan? The process of product design is not a simple matter of comparing and contrasting with the process of product design. Inseparable? The product design is not a good idea, but it is a good way to improve it. What is the most important thing about the design of the product? Bryan What are the risks of taking risks? Let yourself down and take risks? What are the risks? What are the risks of taking a risk? What are the risks? What are the risks? What are the risks of taking risks? Disgruntled? Taking risks? What are the risks? Take risks? Analyze the links between operations.) Analyze the connection between operations, the various operations under the job costing method are connected to each other to form a job chain, and the ideal job chain should make the shortest time and the least number of repetitions of the job completion. From this, we know that job management is not only a management task, but more importantly, it is also a dynamic process of continuous improvement of the enterprise's operational activities. On the basis of job costing, we put forward the following management suggestions for Xi'an Agricultural Machinery Factory.

2.1 Reduce cost through operation chain and value chain analysis

(1) In the value chain analysis, we found that the four operations of production coordination, testing, repair and transportation, although they do not increase customer value, but can not be eliminated, but their costs can be reduced. For example, production coordination, testing, repair of these three operations, their redundancy is more, before it is divided into various sub-factories, personnel scattered in various positions, although it is felt that there is redundancy, but I can not say where more people, according to the operation of the fixed-post staffing, will be the previous summary of the dispersal of the personnel, the problem will be realized immediately out. Each operation can cut half of the personnel, the consumption will be reduced by about 1/3.

(2) Through the operation chain analysis, it is found that Xi'an Agricultural Machinery Factory's production operation arrangement is more chaotic. In view of the above situation, the following suggestions in terms of operations management: overall is based on the sales volume to determine the production volume, according to the status of the production schedule to determine the inventory, the actual work can be used to plan the review method (PERT) for the production arrangements. First of all, reverse a certain product production schedule, from the delivery date to determine the delivery period, according to the delivery period to determine the delivery of the assembly of the components of the time, and then combined with the process is parallel production or serial production to determine the material and its production time in the various workshops. After the production time of various products is determined, the optimization process is carried out to find out the critical path, and in the actual production on the critical path of the process operations are strictly controlled to ensure that customer demand. Here the program trade-offs to high efficiency and low cost as a criterion for judgment. High efficiency is the process before and after the convergence of good, minimize idle time, to achieve coordinated production; low cost mainly refers to reduce the number of stuck production of different products and reduce the number of equipment adjustments and inventory costs, etc..

2.2 Eliminate or reduce non-value-added operations, reduce costs

Transportation operations are mainly intra-plant transportation, the main means of transportation is the forklift. After centralizing the forklifts scattered in each branch plant as one operation management, there are 3 or 4 forklifts seem redundant. This is mainly because of the centralized management of forklifts, improved utilization, flexibility. For example, the former casting plant has two forklifts, and in practice only 4:00 to 6:00 p.m. every day during the parts of the sand fall only after the use of the rest of the time rarely used, resulting in a waste of resources. Now you can not only cancel the plant's original plan to buy a new forklift, you can also sell the excess forklift, thus eliminating the investment in new forklifts and operating costs, but also reduces the cost of existing forklift operation, reflecting the idea of resource integration.

2.3 In-depth operation level to strengthen management, improve enterprise value

(1) Improve the generality of parts design, reduce the cost of related operations. For example, mold production operations, its consumption of resources and the number of types of parts have a direct causal relationship, so you can reduce the number of types of parts in order to reduce the resource consumption of mold production operations. The specific approach is to reduce the number of parts by focusing on their versatility when designing parts. This is most evident in the 24C and 24A large planters, where insufficient consideration was given to the versatility of the parts during the design of the two products, resulting in a large difference between the two in actuality. The designers also believed that it was possible to improve the commonality of the parts of the two products, but at that time, they did not give much consideration to the cost of the problem, and only considered it from a technical point of view. This enterprise is currently considering redesigning the 24C planter. At the same time, the enterprise is preparing to develop 14 rows of planter, 6 rows of film spreader, the cost considerations into the design.

(2) Based on the division of operation centers, the main plant has changed from controlling 5 branch plants to controlling 14 operation centers, which will be beneficial to the management of raw materials. When the main plant can directly monitor the consumption of the 14 operation centers, the speed of information feedback will be significantly accelerated, which strengthens the management of the main plant on the production. The strong supervision of the main plant will effectively prompt the operation center to strengthen the material management, waste, destruction phenomenon will be effectively controlled.

2.4 operation relationship analysis, rationalize the arrangement of production, reduce operating costs

For example, machine preparation operations, the number of preparations for the resource motive, the main way to reduce its cost is to reduce the number of preparations. Reduce the number of adjustments to prepare the premise is to ensure the smooth progress of production, so it is necessary to rationalize the production of various products to minimize the number of repetitive inversion of the number of tooling in order to improve efficiency and reduce costs.

2.5 Analyze and determine the key operations to strengthen the procurement of materials

The benefits of material procurement involves the quality of materials, purchase price and other factors. These factors are important to both the customer and the enterprise. When purchasing materials, you should try to do a comparison of goods, and strive to reduce the purchase price. Purchased materials and materials, accessories, outsourcing parts, etc., when entering the factory, strictly carry out quality testing, and establish a sound system of return and exchange. If the cost rises due to quality problems, the person responsible for purchasing should be held accountable. In addition, it is also necessary to strengthen the warehouse management of materials, such as loss and waste caused by subjective reasons, to be held responsible for warehouse management personnel.

Three, ABC, ABM development prospects

Operation costing is produced in advanced manufacturing enterprises and have significant results. But it is not only applicable to advanced manufacturing enterprises, such as Xi'an Agricultural Machinery Factory, a non-advanced manufacturing enterprises, due to the production of large differences in the number of products, manufacturing costs and direct labor costs than the high ratio, is also suitable for the operation of ABC. Unlike the advanced manufacturing enterprises, its utilization effect is a little worse. Some foreign non-manufacturing industries, such as finance and insurance, business, health care and other successful application of ABC cases. At present, there are many enterprises in China to implement diversified business strategy, to take more varieties, less batch mode of production, to promote the use of these enterprises as a pilot ABC, will not only provide them with relatively accurate cost information, to facilitate the development of scientific and effective business decision-making, related capital expenditure decisions, to improve the competitiveness of the enterprise, but also through the implementation of the operation management to improve its management level, prompting the modernization of management

Operation management is the most effective way to increase the value of an enterprise.

Operation management of the management of the center of gravity to the operation level, to "operation" as the starting point and core of enterprise management, than the traditional "product" as the starting point and core of enterprise management, in the level of greatly deepened. Just as biology in-depth to the molecular level and the formation of molecular biology, the formation of major changes in the biological sciences, business management to the management center in-depth to the level of operations and the formation of operational management, can be regarded as the beginning of this century, the creation of the "doctrine of scientific management," since the creation of Terra, in business management and another major revolutionary change, which will have a far-reaching impact on the theory and practice of business management. It will have a profound impact on the theory and practice of business management.

References:

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2. Hu Yuming. The Basic Characteristics of Assignment Management and Its Significant Pioneering in Management. Contemporary Finance and Economics, No. 8, 1994

3, B.B. Tuney, Conmen Cents: The ABC Performance Breakthrough, Portland, OR, Cost Technology, 1992

4, H.T. Johnson and R.Raplan, Releuance Lost; The Rise and Full of Management Acc Ounting, Harvard BusinessSchool, 1986

5. "Implementing Activity - Based Cost Management: moving from Analysis to Action" By R. Cooper R.s Kaplan L.S. Maised E. Morrissey R.M. Oehm Institute of Management Accounting 1992