The establishment of ABC activities for manufacturing industry using process planning

The accurate evaluation of production costs has become absolutely essential for manufacturing companies today. The value of direct costs in production process of manufacturing system has been reduced by effective design and production technology of using automated equipments. But the value of indirect costs such as user-friendly design and after-sales sevice have raised by demands of consumers and the competition with other companies. Therefore, new financial evaluation methods have been brought out over the last few decades for providing more useful costing information. The Activity-Based Costing（ABC）which is based on actions of production to count the cost of product, is considered an effective solution to allocate indirect costs and supply correct costing management. Even ABC method has been successfully used to analyse the cost of many enterprises, there still are some problems of using that. The resources, activities and drivers are keys of ABC, but it does not propose general criteria for indentifying the relevant resources, activities and cost drivers on manufacturing production system. So this article proposes a method to establish a set of activities, which are inspired by process planning and standards of ISO/TR 10314. This method enables to deduce the activities and resources related to cost objects systematically. An industrial application is also discussed to illustrate the use of this method. By using this method which is based on process planning, there is more convenient to find the activities having similar purposes and build cost counting formula. For enterprises which desire to use ABC to obtain cost information, this method is helpful.