What is the traditional cost calculation method?

Traditional cost method refers to the method of enterprise auxiliary cost allocation. The so-called supporting cost refers to the cost of supporting the completion of products or services except direct materials and direct labor.

The basic principle of traditional cost calculation method can be summarized as follows: according to different cost calculation objects, the expenses incurred in the production process are collected. Generally, it is divided into three parts, namely, direct materials, direct labor and manufacturing costs; Then, according to the principle that direct expenses are directly included and indirect expenses are allocated, the manufacturing expenses incurred are allocated to the corresponding cost objects according to certain standards. The main limitation of traditional cost accounting system is that it uses quantity-based cost drivers. When enterprises produce diversified product combinations with different quantities, specifications and complexity, such distribution ratio will lead to inaccurate product costs. Nowadays, many enterprises have adopted highly automated production technology to meet customers' diversification and small batch, and can produce personalized, multi-variety and small batch products quickly and with high quality. With the emergence and development of automation technology, the production state has changed from "multiple people operating one machine" to "one person operating multiple machines". As a result, the proportion of fixed manufacturing costs in product manufacturing costs has greatly increased. In this case, enterprise managers are required to revolutionize the accounting of manufacturing expenses, and the focus of cost accounting is required to shift from direct labor to reasonable distribution of manufacturing expenses, so as to improve the accuracy of product cost calculation and the effectiveness of cost control.