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mely, accurate and relevant cost information for the enterprises in the work. Meanwhile, as a cost calculation method, Activity Based Costing is based on cost driving force theory according to the re1ations between product and activity, activity chain and value chain, which occur during the process of product production and running. By analysis of the driving force of cost and selection of the activity cost as the calculating object, we could allocate the produce running cost. Activity Based Costing regards the enterprise as designed assembled activity of “a series of activities in order to meet the customer demand, and every activity cel1ter is a cost allocation unit. Looking the enterprise as an internal-external activity chain, whether an activity is finished, it will cost some certain resource and forms some certain value, which may be transferred to the next center and set up a value chain, and finally gain profit by transfer it to the customer for income.

In the real case of the application of ABC, which is found in the cost management experience in Chinese advanced enterprise, this paper is seeking appropriate method and strategy of the app1ication of ABC by ana1ysising and research of the environment and factors that they automatically formed.

Key words: Activity Based Costing, Traditional cost method, Cost management

1. Introduction
1.1. Research background
Activity Based Costing is based on the theory of the cost driver, according to the relationship between the product and operating chain and value chain during the production and management. It is a cost accounting approach that we select operation as the cost object and allocate the cost of production and operation, due to the dynamic analysis of occurrence cost. It can consider the enterprise as a final design of "a series of" co-operation set operations to meet the needs of customers, and each operation is a cost center and allocation of units. The enterprise can be considered as chain operations from the inside to the outside, to spend some resources on a certain value, in the next center to form a value chain, and finally transferred to the customers through access to achieve income and profits.

In the activity-based costing, the cost ownership starts from causal relationship, and indirect costs are no longer in the direct distribution of products. Thus, the cost distribution has more specific causal link, and the product cost is also more accurate and reasonable. Therefore, the selection of activity-based costing makes the expansion of the concept of cost state and more accurate costing, decision-making more effective, more flexible pricing.

Management accounting is set from the early twentieth century and the creation of management up to the present has gone through almost a century. In the process of the constantly absorbing new methods of modern management science, the management accounting theories and methods gradually achieve mature and improvement in practice. It has made an important contribution to strengthen and improve the operation and management of the enterprise. In particular, such as predictive analysis, decision analysis, cost control and responsibility accounting methods use in the enterprise, its effect is particularly significant for enterprise management and has brought vitality and enjoyed benefits to the factory directors and managers.