The study of product costs for the IC foundry - The application of Activity-Based Costing
Sue Fung Wang
The Foundry business is a new business model in the semiconductor industry, which is invented by the special semiconductor market requirement. With the incentive of high profit margins, the new companies jumped into the business very aggressively. The competition is becoming so intense that the new comers cannot but apply a provocative pricing strategy to attract customers. Among the fierce competition environment, well cost plan and control becomes one of the vehicles for maintaining competitive advantages and sustainable long term profits that are essential to the survival of a company and to future expansion as well. Up to this moment, there are many papers get involved the study of activity-based costing (ABC). Obviously, it is recognized as a well-known effective tool for the Cost Accounting system build-up. Non-the-less, in Taiwan, there are quite a few papers in the scope of the application of ABC in Foundry industry. This paper study how a foundry company by adopting the activity-based costing (ABC) trace and manage its product costs. By doing it, the following purposes may be achieved to enhance the competitiveness and profitability of a company. 1. Through the deployment of ABC system, a company may build up a integrated Cost Accounting system with Standard Product Costing and Actual Product costing mechanism both, that can help a. To make company’s maximum profit through providing timely actual product gross margin information in product mix decision. b. To enhance the mechanism of Cost plan and control more effectively through providing enhanced manufacturing cost variance analysis. c. To pursue the Standard costing more precise through adopting the ABC and understand cost nature more. 2. To accumulate experience for the effective Cost Accounting system build-up in the future.
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