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"Distorted cost information is likely to result in over the confidence of the production line and the inability to adjust in time the procurement, production and sales plans according to the market changes. The K/3 system helps XJ Group Corporation effectively avoid the hidden problems and strengthen the awareness of exploring cost control potential."
---- Liu Wenxin, Director of Cost Section of Finance Department of XJ Group Corporation
About XJ Group Corporation
XJ Group Corporation is a large state-owned holding enterprise that is specialized in the R&D, manufacture, and sales of the automation, protection and control equipment of the power system. It is one of the 520 national key enterprises and one of the twelve groups that Henan Province established as key groups. The group consists of 21 child companies, including two listed companies, XJ Electric Co., Ltd. and Tianyu Electric Co., Ltd., and eight Sino-foreign (or Hong Kong) joint ventures.
In 1997, XJ Electric was listed in Shenzhen Securities Market. In 2005, XJ Group Corporation secured a sales revenue of RMB 6 billion (pre-tax), with RMB 38 million of profits. The group established over 40 sales branches and marketing network sites in the provinces and cities of the country and was supported with a team of 4783 employees. The statistical information in 2001 by the National Bureau of Statistics of China shows that the product sales revenue and the integrated profit of XJ Group Corporation were both No. 1 in the power supply and distribution and the control equipment manufacture industry of the country. Based on those facts, XJ Group Corporation has become an important base of the power supply and distribution and the control equipment manufacture industry of the country, and has played a critical role in the power construction of China.
Management Puzzles:
- Overly concentrated accumulation of cost expenditures
- Singular distribution standard of cost expenditures
- Weak cost awareness of the employees
- Difficult determination of internal transfer price
Kingdee K/3 Manufacture Solution
To center on the construction requirement of "Unified resource accumulation and unified cost distribution" of XJ Group Corporation, the Kingdee K/3 system aids the enterprise to formulate the internal transfer price and properly fuse the operation cost method and the standard cost method to perform cost control. After the K/3 system is incorporated onto the system, the cost accounting system of XJ Group Corporation gears up the support to pricing decision making, and is able to make reasonable resource distribution decisions according to the actual operation supply volume.
Customer Values
- Ideal cost accounting system
- Strengthened cost control
- Improved cost decision-making support function
- Improved utility rate of internal resources
The King K/3 system assists XJ Group Corporation in solving the production cost distortion that results from unreasonable expenditure distribution methods, and enables the product line managers to acquire authentic and effective cost data from the accounting department. Consequently, operation decision-making mistakes due to the distorted cost information are mitigated. The long-term problem that troubles XJ Group Corporation is eventually removed. In addition, the production lines can also change the strategies according to market changes, enhance the understanding of cost knowledge of the employees at the same time, and further heighten the awareness of cost control and potential exploration. |
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