Research and Practice on the Process Cost Estimation Based on Working Procedure of Railway Transportation Equipments

doi:10.4236/ib.2011.31015

Paper Menu >>

Journal Menu >>

iBusiness, 2011, 3, 97-106

doi:10.4236/ib.2011.31015 Published Online March 2011 (http://www.SciRP.org/journal/ib)

Research and Practice on the Process Cost

Estimation Based on Working Procedure of

Railway Transportation Equipments

Ziqin Ma 1, Peng Lu 1, Zhigang Yan g 1, Yongcai Sun 1,2, Guangwei Qi 1

1School of Mechanical Engineering, Dalian Jiaotong University, Dalian, China; 2China CNR Corporation Limited, Beijing, China.

Email: [email protected], [email protected], zg[email protected], [email protected] ,[email protected]

Received December 16th, 2010; revised January 20th, 2011; accepted January 24th, 2011.

ABSTRACT

With the rapid development of Chinese economic, enterprise cost control and management of enterprise face enormous

challenges. Traditional cost control and management are almost dominated by after-costing in mainland. Prior-cost

estimation is generally based on statistical result of histo rical cost data. The theories of cost accounting and Enterprise

Resource Planning are uses for reference. The prior-estimation of process-based cost of railway transportation equip-

ments is researched and p racticed fro m the produc t manufacturing process. In the view of refined manag ement of co sts,

the constitution o f the process cost is a nalyzed in manufacturing pro cess of railwa y transportation equipmen ts, and it is

presented that a mathematical model of cost estimation based on working procedure. Enterprise could know the process

cost of a product before it is manufactured by it. Tha t provides a reliable basis for controlling and manag ing the enter-

prises prosecution cost. Then the process cost estimation based on working procedure of a gear is selected as an exam-

ple, which is one of the gears in starting transmission of the railway locomotive diesel engine.

Keywords: Refined Management, Process Cost, Cost Estimation, Working Pr ocedure, Railway Transportation

Equipments

1. Introduction

Cost estimation is an important means for strengthening

enterprise cost management. The reasonableness and

accuracy of estimation is the key in determining their

profitability, competitiveness and sustainable develop-

ment. The cost estimation and control in Chinese railway

transportation equipments manufacturing industry can

reduce the waste of resources in labor power, material

and financial and enhance their skill lev el even the whole

manufacturing [1].

Along with the rapid development of Chinese railway

transportation equipments manufacturing industry, cost

estimation has become increasingly important role. The

method of estimation is also developing towards the di-

rection of more scientific and rigorous. Although the

level of cost control and management has been improv-

ing, it has not break down the dominating status of

post-costing. This rough costing method not only does

not reflect the real resources consumption during produc-

tion, but also affects measurement and reports of other

managing information, so it can not meet the needs of

cost management in manufacturing at this stage.

In this paper, we submit the method of the process cost

estimation based on working procedure for conquering

the shortcomings and limitations of cost accounting, Ac-

tivity-Based Costing (ABC) and Enterprise Resource

Planning (ERP) cost checking, which based on the cost

checking of Chinese traditional railway transportation

equipments manufacturing industry. This method can

estimate the production costs in advance and guide the

product manufacture cost control and management in

point of engineering view. Make the process of products

as the basic cell in estimating costs which forms the

model of process-based cost estimation more carefully

and analyze the process cost of the transmission gear in a

locomotive enterprise. The relative theory and method

has important reference to the cost calculation in the

process of other product life cycle.

Research and Practice on the Process Cost Estimation Based on Working Procedure of Railway Transportation Equipments

2. Accounting Cost Calculation

2.1. Accounting Cost Estimation

There are some methods of accounting cost estimation in

common use. The high-low method of cost estimation is

direct way to determine the variable cost and fixed cost.

Its main idea is to confirm unit variable cost to the cost

variance of the highest point and the lowest point cost of

volume of business history in relevant range. And fixed

cost can be got by subtracting variable cost from total

cost. Scatter diagram is a useful means of cost estimation

using graphic method. It is more efficient especially to-

gether with the use of other methods of cost estimation.

That method is to draw the historical cost data points on

the coordinate diagram and to determine the cost perti-

nence. Least-squares regression analysis is to develop the

observation data into a cost estimation formula using

mathematical methods. Its idea is to minimize the sum of

vertical variance between actual cost values and esti-

mated values of each observation point [1].

Accounting prior-cost estimation is generally based on

statistical result of historical cost data. It considers only

the factor of the volume of business generally, and lacks

of affirmatory conditions. So the estimated result is im-

precise.

2.2. Accounting Costing

Product costing makes product as the basic cell in calcu-

lating cost, such as particular product or batch of prod-

ucts, or a particular manufacturing process. The costing

method is called manufacturing costing method within

the range of manufacturing [2].

2.2.1. Cost Stru cture

The cost structure of manufacturing cost method includes

direct materials and direct labor and manufacturing

overhead.

Direct materials cost is the cost of main raw materials

applied to a particular product. It depends on the con-

sumption number of unit material. And it can be identi-

fied simply by multiplying the consumption number of

raw materials and its unit cost.

Direct labor cost is the cost of labor applied to a par-

ticular product. It can be got by multiplying the direct

labor time and wage rate.

Manufacturing overhead includes all manufacturing

cost besides direct materials and direct labor. It is used

directly for production, but it fails to be credited directly

to a particular product cost. Most elements of manufac-

turing overhead do not have direct relationship to proc-

essing of the product. In actual production costing, if the

workshop produces only a product, the manufacturing

costs can be reckoned directly in production cost of the

product, otherwise the manufacturing cost is reckoned in

various products respectively ruled by reasonable alloca-

tion method. There are a lot of methods to assign manu-

facturing cost. Some of them are commonly used, such as

proportion al distribution of the prod uction hours, propor-

tional distribution of worker’s wage, proportional distri-

bution of machine hours and proportional distribution of

annual planning.

2.2.2. Costing Methods

The manufacturing costing methods can be divided into

category costing method, job order costing method and

process costing method [2].

The category costing method is a calculating cost

method considering the assortment as cost objectives to

collect and allocate production costs. The costs are dis-

tributed between finished product and good in process.

This method is suitable for volume-produce of one step

produce and multi-step produce calculating costs ac-

cording to production steps on management.

The job order costing method is to collect production

costs in accordance with the batch or order form and

mainly used in single and small batch production. This

method seems each product or each batch as the cost

objective to calculate the costs. The calculating cycle of

cost consistent with its life cycle and the produ ction costs

are collected in different batches.

The process costing method is to calculate product

costs based on production steps and species of goods to

collect and allocate production fees applying for con-

tinuous, large and multi-step producing industrial enter-

prises. In the light of different situation, it can be divided

into parallel step, the proportion of law equivalent units,

and gradually carried forward sub-step.

2.2.3 Costing Process Flow

The general costing process flow is summarized as Fig-

ure 1.

1) Identify cost objectives and cost projects. For

manufacturing, the cost objectives include product cate-

gory, product job order and product process.

2) Audit various expenditures and costs strictly. De-

termine the costs includ ed in products.

3) Accumulate and allocate on productive expenses

elements. Allocate on various costs according to projects

among different products.

4) Accumulate and allocate au xiliary production costs.

5) Accumulate and allocate manufacturing overhead.

For the allocation of manuf acturing overhead, you sh ould

pay more attention on selecting the distributing standard.

6) Distinguish the costs between work-in-process and

finished product.

7) Calculate the total cost and unit cost of finished

products.

Research and Practice on the Process Cost Estimation Based on Working Procedure of Railway Transportation Equipments 99

Period costs

Outsourcing materials

Figure 1 Product costing block diagram.

Accounting costing method is b ased on a total qu antity,

and calculate unified distributing rates of manufacturing

overhead to allocate the manufacturing overhead. The

main purpose is to create cost-sharing provide a unified

basis. But with the increasing complexity of manuf actur-

ing costs, they can not show the causal relationship be-

tween output and costs objectively using every kind of

allocation criteria, which lead to results co arse relatively.

In addition, this is post-costing method, which only tells

you the costs occurring in each project, cost overruns or

savings, and the reason is unclear, the responsibility is

unknown. So it can not control cost effectively.

3. Activity-Based Costing

ABC is a cost checking and management method, it al-

locates the consuming resources to activities ruled by

resource driver and assigns collecting costs to cost objec-

tives according to activity driver. Its characteristic is to

calculate costs surrounding the activities. The core idea

of this method is to ascribe manufacturing overhead to

each activity, and then share each activity costs to prod-

uct costs. The main difference between ABC and tradi-

tional method lies in the ways of allocating manufactur-

ing overhead. ABC has its own basic concept that the

manufacturing gives birth to activity, the activity con-

sumes resources and produces costs and the product

consume the activity. It assigns the manufacturing over-

head to products through two stages [1], the first is to

collect all consuming resources fees of job center to gen-

erate activity costs. The other stage is to distribute the

collecting costs ruled by activity driver to products, and

then calculate the product costs. The calculation princi-

ples of ABC are shown in Figure 2.

The calculating process of ABC:

1) Activity analysis.

2) Determine the resource driver, and then establish

activity cost.

3) Confirm the activity driver and the distribution rate

of each activity cost.

4) Allocate activity cost.

5) Calculate costs of each cost target, the costs content

total costs and unit cost.

Based on activities, ABC assigns indirect costs using

different distribution rates, which is an innovation. But in

fact, the dist inction of activit y is difficult, the o peration of

setting the costs on activity is based on subjective esti-

mated data, the accuracy of results is impacted greatly [3].

4. ERP Costing

Enterprise Resource Planning reflects the most advanced

enterprise management theory all over the world, which

unified the logistics, capital flow and information. Based

on information technology, ERP integrates all resources

information comprehensively using advanced manage-

ment idea in modern enterprise, and ERP is a compre-

hensive and systematic management platform providing

decision-making, planning, control and evaluation of

business perfor m a nce [4].

ERP cost checking supports ABC as well as traditional

method of varietals method, job lot method and step al-

location method, which is based on product structure,

namely BOM. In calculation, the bottom is raw material.

The method of calculating direct materials costs and di-

rect labor costs of each level is convolution. The calcula-

tion of direct materials is shown in Figure 3 [4]. To cal-

culate direct labor costs is to accumulate costs from bot-

tom to higher level using process route file and BOM

Depreciation

Employee benefits

Outsourcing fuels

Auxiliary production

costs

Manufacturing

overhead

Costing objects

Finished product costs Work-in-process costs

(2)

(3)

Prepared amortiza-

tion costs

(7)

(1)

(6)

(4)

(5)

Other costs

Research and Practice on the Process Cost Estimation Based on Working Procedure of Railway Transportation Equipments

100

Figure 2. Calculation principle of ABC.

Figure 3. Direct materials costs calculation.

until to the highest level, it is sho wn in Figure 4 [4]. But

the manufacturing overhead adopts traditional allocating

method. However, with the increasing proportion of

manufacturing overhead in product structure, this ap-

proach has been unable to meet the needs of deci-

sion-making.

The basic data related to ERP cost checking are dis-

played as follows: the numerical relationship between

structure chart of products and materials in BOM, the

quota of standard time and consumed materials, pro-

curement costs recorded in item master, various time cost

rates in work center file, standard time in process route

file, the data of completion report and materials received

report and so on.

The work of calculating product costs in ERP can be

divided into the following.

1) Determine cost objectives.

2) Ascertain the period of calculating costs. It is how

long between the two-time calculations.

3) Check the actual costs of materials.

4) Collect and allocate each production fees.

5) Allocate product costs between finish products and

goods in process.

ERP cost management can really make enterprises

achieve prior-planning, mid-event control and post-

analysis to improve the management level and enhance

he competitiveness. By means of ERP, enterprises can

check costs more exactly and control costs more effec-

tively.

5. The Process Cost Estimation Based on

Working Procedure

Process cost is the monetary measure of the relevant

consumption in the manufacturing process of products or

components, it is one of the core component of products

cost. Process cost forms in the production process. The

characteristic of machining affects the method of cost.

Cost accounting provides information for cost manage-

ment [5].

The process cost estimation based on working proce-

Resources m Resources 2

Activity n Activity 2

Resources driver Resources driver

Product 1 Product r

Activity driver Activity driver Activity driver

The first stage

…

Resources 1

Resources driver

Activity 1 …

The second stage

…

Product A

Accumulate resources costs= Resource D cost +

E resource cost Component B Resource C

Resources costs=purchase costs + indi-

rect purchase costs

Accumulate resources costs = Resource D cost +

Resource E cost + Resource C cost

Resource D Resource E

Research and Practice on the Process Cost Estimation Based on Working Procedure of Railway Transportation Equipments 101

Work center 2

（Product A assembling） Direct labor costs 2= work center 2 rates × Product A assembling time + Direct labor

costs 1

Work center 1

（Component B assembling）

Figure 4 Direct labor costs calculation

dure replaces the method of the traditional rude cost al-

location in terms of cost refined management. In terms of

technology, use the method of prior estimate which could

amend the results of the production process timely and

direct production in turn. The method of cost estimation

based on engineering in China is still in the stage of ex-

perience. In which the process cost estimation based on

working procedure is the most sophisticated and rela-

tively high accuracy. The basic data of this method

comes from process cards, standard time quota and mate-

rial quota, standard price, standard rates and so on. This

makes the allocation of indirect costs more accurate and

true and the resulting cost information more exact and

detailed. Not only solve the traditional problem of ir-

regular distribution, but also remove the su bjectivity. Th e

costs associated with the process are shown in Figure 5.

The method of calculating the process cost estimation

based on working procedure is to calculate the process

cost of each process according to the manufacturing

process of the product or the component. In the given

estimating model, all costs are related to specific pro cess.

For different costs, they are allocated to different prod-

ucts or components according to different rules, this

method can make the model more flexible and practical.

The costs include direct materials, direct labor costs and

indirect costs. The sum of the all process costs based on

working procedure of one part is the singleton part costs

of this part, the singleton part costs of the whole product

is to integrate all parts’ costs in terms of the product’s

structure.

The process cost estimation based on working proce-

dure can be summarized as follows [6] in Figure 6.

1) Determine the components of raw materials and

manufacturing parts in direct sub-parts of the compo-

nents according to the BOM of manufacturing.

2) Determine the following factors according to the

process card, the procedure card, the time quota and the

material quota.

a) The artificial technical level of processing, adjusting

and inspecting.

b) The time quota of the time per piece, the basic time,

auxiliary time and so on.

c) The quota of raw materials.

d) The equipment, fixtures, cutting tools, measuring

tools, etc. needed in this part.

Because of the construction of railway transportation

equipments are perplexed, the production type is single

unit job lot production. Considering the available use of

the general and specific equipment, the formula of cal-

culating each technology and process cost is displayed as

following [6,7].

5.1. Technology and Process Cost of Direct

Material

The formula of calculating the technology and process

cost of direct material is shown as the formula (1).







cxmz

CCgKK2

(1)

In the Formula (1):

cis the technology and process cost of direct material,

yuan.

Cis the material price per unit weight, yuan/kg.

is the process quota of the consuming direct mate-

rial based on unit product, kg.

is the coefficient of price ratio (material price based

on unit weight/waste material price based on unit

weight).

is the coefficient of material utilization ((the

weight of a single blank - the weight of waste material)/

the weight of a single blank).

In view of the structural features of the railway trans-

portation equipments, the volume of a blank is much

larger than that waste material, so the value of 1

ap-

proaches zero, it can be negligible, the value of 2

Direct labor costs 1= work center 1 rates × Component B assembling

time

Picking resources Direct labor costs of Single product A

Research and Practice on the Process Cost Estimation Based on Working Procedure of Railway Transportation Equipments

102

Figure 5. The process cos t es timation based on working p rocedure constitutions.

approximately equal to 1. We continue to simplify the

Formula (1) to (2)

cxm

CCg

(2)

For mechanical processing, the consumption quota of

raw material is composed by product and the chip which

is produced by the process. The process consuming quota

of bar part is shown in Formula (3):

3) Get the following data from the production, equip-

ments, energy, finance, human resources and other de-

partments.

a) Annual output.

b) The wage rate of artificial level.

c) The calculated unit price of raw materials.

d) Technical parameters and the depreciation of

equipments.

e) Other expenses.

4) Calculate each technology and process cost, the

technology and process cost of process can be obtained

by adding all technology and process costs.

0 7854

10 mx

.DL



 (3)

In the Formula (3):

Dis the diameter of the blank, mm.



is the density of the material, g/cm3.

Lis the length of the consu ming blank, mm.

5.2. Process Cost of Direct Labor

For the model of mechanical processing, machining time

of a unit product as time quota is used to reflect the labor

quota. The consuming quota of unit time based on unit

product can be ident ifi e d by F ormula (4):



drg







 (4)

In the Formula (4):

gis the technology and process cost of direct labor,

yuan.

Tis the wage rate of workers, yuan/h.

uis the consuming time of a unit part, min.

is the welfare rate related to th e wage of workers, in

this situation we set it as 14%.

5.3. Electricity Cost of Machine

160

kEd

Cd= T















 (5)

In the Formula (5):

Cis the electricity cost of machine, yuan.

Tis mobile hours of one-piece, min.

Pis rated power of the electrical motor, kw [8].



is the load coefficient of the electrical motor, i



0.5 - 0.9 [8].

Sis the electricity price per hour, yuan/kw·h.

The process cost estimation based on working procedure

Direct costs

Direct materials costs

Direct labor costs

General equipment maintenance costs

General fixture maintenance costs

Indirect costs

Variable costs General tools maintenance costs

Special equipment maintenance costs

Special fixture maintenance costs

Special tools maintenance costs

Special equipment adjustment costs

Other variable costs

General equipment depreciation

General fixture depreciation

Special equipment depreciation

Other fixed costs

Special fixture depreciation

Special tools depreciation

General tools depreciation

Fixed costs

Research and Practice on the Process Cost Estimation Based on Working Procedure of Railway Transportation Equipments 103

Figure 6. Process cost estimation flowchart.

5.4. The Cost of Machine Depreciation

5.4.1 The General Machine Depreciation

115

kji ji

iiz

.SL











di



(6)

In the Formula (6):

Cis the general machine depreciation, yuan.

Sis the price of machine, yuan.

Lis the machine depreciation rate, about 10% per

year.

is the annual working time of machine, hour.



is the utilization rate of the machine, now we chose

the value as 0.95 according to the situation.

1.15 is the cost factors related to the tran sportation and

installation of the machine.

5.4.2 The Special Machine Depreciation

115 kji

zz ici

C. nN



 

 (7)

In the Formula (7):

cis the depreciable life of machine (according to the

table of depreciable life about fixed assets, is eight-

een years).

nis the special machine depreciation, yuan.

N is the annual yield.

The formula of the special machine depreciation has

another format like Formula (8):

115 k

zz i

C. N







 (8)

In the Formula (8):

p is the percentage of depreciation and overhaul of

special machine, is

p1c

5.5. The Cost of Adjusting Machine



ttg







 (9)

In the Formula (9):

Lis the adjustment of special machine, yuan.

Tis the wage rates of adjusting workers, yuan/h.

tis annual adjusting hours, h.

5.6. The Cost of Fixture

5.6.1 The Cost of General Fixture







160

ktjii i

iji ji

sab













 (10)

In the Formula (10) [9]:

Cis the cost of general fixture, yuan.

is the cost of the fixture, yuan.

a is the depreciated rate of the fixture, about 30% to

50% each year.

b is the cost of repairing the fixture, about 10% to

20% each year.

is the annual working time of machine, hour.

Process card

Procedure card

Time quota

Material quota

Other related data

Data related to production

process

BOM

Annual output, wage rate,

depreciation

Calculate each section

Direct component con-

stitution

Summation

Research and Practice on the Process Cost Estimation Based on Working Procedure of Railway Transportation Equipments

104



is the utilization rate of the fixture, now we chose

the value as 0.95 according to the situation.

5.6.2 The Cost of Special Fixture







kzjii i

jz i





 (11)

In the Formula (11) [9]:

Cis the cost of special fixture depreciation, yuan.

is the cost of the fixture, yuan.

5.7. The Cost of Tools

dadapj

CST (12)

In the Formula (12):

Sis the cost of tools, yuan.

dap is the average cost of using tools per minute while

the machine is working, yuan/min.

5.8. The Cost of Repairing Machine

The Machine maintenance costs are classified into large,

medium and small repair. Medium and small amount of

repair costs less. The calculation of the cost of overhaul

is the same as depreciation, it is about 10% - 15% in the

general price of each machine every year, the common

costs of the machine overhaul can be found in the sched-

ule of machine overhaul fee, the period of Machine

overhaul costs is three-year.

C is classified into 5.8.1

the cost of repairing general machine

C and 5.8.2 the

cost of repairing special machine

5.9. Technology and Process Cost of a Single

Product C

Calculate each cost above-mentioned. And the sum of

them is the technology and process cost C of the single

part in the working procedure shown as the Formula (13).

Then the set cost of all th e working procedure of the sin-

gle part is its technology and process cost. After all, the

technology and process cost of a single product can be

summed according to its bill of materials and the method

of ERP (Enterprise Resource Planning).

Cjgdzda

CCCC CCC



 (13)

6. The Application for Manufactured

Railway Transportation Equipments

The transmission gear in a locomotive enterprise is se-

lected as an example, in which the fixed cost quota is

determined by process. The manufacturing process and

time of the gear is shown in Table 1. Table 2 is to the

second process, which gives the method of process cost

calculation, others to this analogizes. The entire process

cost calculation of the gear is shown in Table 3.

Table 1. The manufacturing proc e ss and its proc essing time.

Process Process Content Process Equipment Mobile working

hours, min Process

Time, min

1 Forgied material / / 0.502

2 Rough turning Lathe C630 9.251 10.461

3 Finish turning Lathe CW6163C 9.923 11.844

4 Hobbing

Gear hobbing machine

Y3180H 91.140 93.471

5 Grinding side

surface Surface-grinding machine

M7150A 13.037 15.011

6 Grinding hole Internal grinder M2120 16.550 20.338

7 Gear grinding

Gear grinding machine

ZB70 72.500 75.183

8 Check Gear tester / 0.500

Table 2. The process costing of the second process.

Items code Items of Process Costing The Cost of Single

Process

5.1 Direct materials cost

C54.02983

5.2 Direct labor cost

1.9874

5.3 Machine electricity cost

d0.56138

5.4.1 General machine depreciation

C 0.43104

5.5 Adjusting machine cost

C0.0114

5.6.1 General fixture cost

C 0.00078

5.7 Tools cost

C0.25715

5.8.1 General machine repairing cost

C 0.14368

5.9 Aggregation C 57.42266

Research and Practice on the Process Cost Estimation Based on Working Procedure of Railway Transportation Equipments105

Table 3he entirrocess cost calculation.

. Te p

CodeProcess 1 2 3 4 5 6 7 8

5.1 Direct materials

cost c

C 53.54.57. 61. 85.93. 99.152.

93483 0298342266 52007 45805 73094 90157 42656

5.2 Dir st 0.095 1.9874 2.2496 17.7593 2.85 3.8627 14.2842 0.095

5.3 Machine

/ 0.56138 0.779123.5775 2.51192 0.44904 36.2355 /

/ 0.43104 0.585481.854361.05558/

5. Spe 1. 0.

m0.0114 0.0114

0.00078 0.000880.002320.00314

5. Special fixture

5.7 / 0.257150.27578 0.88367 0.424780.4369 0.662 /

5.8.1 General m

/ 0.14368 0.19516/ 0.61812 0.35186/ /

5.8.2 Special m

repairing cost / / / 0.42593 / / 0.33222 /

5.9 Aggregation

C 54.02983 57.4226661.52007 85.45805 93.73094 99.90157152.42656 152.5216

ect labor co

electricity cost

5.4.1 General machine

depreciation zt

C/ /

4.2 ecial machin

depreciation zz

C/ / / 27778 / / 99667 /

5.5 Adjusting

achine cost Ctg

/ 0.0114 0.0114 0.0114 0.0114 /

5.6.1 General fixture

costC

/ / / /

6.2 cost jz

C / / / 0.0024 / / 0.003 /

Tools costda

achine

repairing cost

achine

By the calculation above, the estimated cost for the

transmission gear is 153 yuan, the results of this method

is accurate and reliable, and the calculation is straight-

sp, and has a strong practical value.

forward, easy to gra

7. Conclusions

The process cost estimation based on working procedure

is playing an increasingly important role in Chinese

modern railway transportation equipments manufacturing

industry, the reason why it is called estimation is because

the basic data of it are estimated. Compared with the tra-

ditional cost checking methods, the quantitative estima-

tion for process cost can provide the product planning

and design more scientifically, accurately and quickly,

when the product b eing tendered or discussed . The quan-

titative estimation for process cost during process plan-

ning stage can find the key of the best balance between

product performance and cost quickly.

In this paper, we discuss the basic theories and process

for cost checking and estimate the process cost of a sin-

gle product which based on the transmission gear in a

locomotive enterprise process. The method of the process

cost estimation based on working procedure is based on

the technology information during the process of manu-

facturing cost, which is an advantage. It is more accurate

and reliable than other forms of cost assessment, but

needs detailed and accurate information on working pro-

cedure cost before the calculation. The works on the

process cost estimation are gradually developing in Chi-

nese enterprises and need further study and make process

cost estimation practical, systematization and standardi-

zation. More importantly, establish the system of process

cost estimation.

1) Set up standard basic database. The integrity, con-

sistency and reliability of basic data affect the results of

process cost estimation directly.

2) Achieve generalized process cost estimation.

Manufacturing overhead calculation of process cost es-

timation and cost accounting describe manufacturing

costs from different angles. Manufacturing overhead

calculation of cost accounting has formed a standard.

Therefore, process cost estimation should be closer to

manufacturing overhead of cost accounting and achieve

generalized process cost estimation.

Research and Practice on the Process Cost Estimation Based on Working Procedure of Railway Transportation Equipments

106

3) Achieve process cost estimation under different

conditions. Require different process cost estimation

models and methods in different known conditions, ap-

plications, value of parts and so on.

4) Guide product design and process planning with

ta must limit the product structure,

cost.

which varies by company and needs continuous im-

provement in the ar from what th

REFERENCES

] J. M. Wayne, R. D. James and A. L. Hartgraves.

Ou and S. X. Yang, “Cost Accounting,” Capital

d S. M. Datar, “Cost

ontemporary Technology and

4th International Conference on

P. Zhou and Y. D. Cheng, “Metal Cutting

Machine Manual,” Chongqing University Press, Chong-

qing, 1997.

Uni

rget process cost. Target process cost is the core of

business target cost. It

aterials and process methods in order to make process

cost lower than target process cost.

5) The prior planning, mid-control and examination

behind of process

6) Achieve digital process cost estimation. Computer-

ized process cost estimation can reduce the intensity of

labor and enhance the efficiency and accuracy of process

cost estimation.

The process cost estimation based on working proce-

dure of railway transportation equipments is an applica-

tion of the proposed process cost estimation framework, Man

application. It is not fis

paper title implies with advanced en terprise management

theory, contempor a ry information technology and so on.

“Management Accounting,” Shanghai University of

Finance & Economics Press, Shanghai, 2005.

[2] Y. Q.

versity of Economics and Busniss Press, Beijing,

2003.

[3] C. T. Horngren, G. Foster an

Accounting,” Dongbei University of Finance &

Economics Press, Dalian, 2000.

[4] H. Luo, “ERP Principles, Design and Implementation,”

Publishing House of Electronics Industry, 2009.

[5] X. L. Wang, “Modern Process Management Technology,”

China Railway Publishing House, Beijing, 2004.

[6] Z. Q. Ma, “Research on C

Process Management and Key Techniques,” Dalin

jiaotong univercity, 2008.

[7] Z. Q. Ma, Y. Yang and Z. G. Yang, “Research on

Procedure-Based Technologyand Process Cost Assess-

ment,” IEEE: The

agement and Service Science (MASS 2010), No.

22402, August 2010.

[8] Y. X. Yin, “Metal Cutting Machine Manual,” National

Defence Industrial Press, 1964.

[9] Z. X. Luo, L.