Activity-Based Costing Method: A Study on Controlling Manufacturing Costs in Enterprises

Accurate cost accounting is essential for effective business management. This paper briefly introducs the activity-based costing (ABC) method, considering time as the capacity and operation driver. The analysis focused on three orders from a parts manufacturing company, Company X, located in Anqing City, Anhui Province, covering the period from January to March 2023. Under the traditional cost accouting method, the cost of part A in order 001 was 412,291.36 yuan, the cost of part B in order 002 was 281,865.94 yuan, and the cost of part C in order 003 was 446,529.46 yuan. Upon applying the time-driven method, the costs were 413,710.10 yuan, 330,300.97 yuan, and 534,582.64 yuan, respectively. The results suggested that the traditional method underestimated the cost of products.