Activity optimization in aircraft manufacturing cost control

Activity-based cost (ABC) was used to replace conventional volume-based product-costing system in addressing cost calculation and optimization issues in the aircraft manufacturing industry. Activity-based management (ABM) was applied to further implement cost control and optimization based on the activity analysis results. Cost calculation based on ABC in five types of subcontract products from a China-based aviation manufacturing enterprise (XYZ) resulted in an optimized workflow. The optimization was realized via adopting measures including a reduced or eliminated activity, activity selection or sharing. Results show that ABC is more accurate than the conventional volume-based product-costing system, and ABM can be a more effective optimization tool for cost reduction and cost control.