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.
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 98
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
c
C
The formula of calculating the technology and process
cost of direct material is shown as the formula (1).



1
11
cxmz
CCgKK2 (1)
In the Formula (1):
cis the technology and process cost of direct material,
yuan.
C
x
Cis the material price per unit weight, yuan/kg.
mz
g
is the process quota of the consuming direct mate-
rial based on unit product, kg.
1
K
is the coefficient of price ratio (material price based
on unit weight/waste material price based on unit
weight).
2
K
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
K
ap-
proaches zero, it can be negligible, the value of 2
K
is
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
z
(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.
2
6
0 7854
10 mx
mz
.DL
g

 (3)
In the Formula (3):
m
Dis the diameter of the blank, mm.

is the density of the material, g/cm3.
x
Lis the length of the consu ming blank, mm.
5.2. Process Cost of Direct Labor
j
g
C
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):

1
60
drg
jg
TC
C


u

 (4)
In the Formula (4):
j
gis the technology and process cost of direct labor,
yuan.
C
rg
C
Tis the wage rate of workers, yuan/h.
d
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
d
C
160
kEd
j
ii
i
PS
Cd= T







 (5)
In the Formula (5):
d
Cis the electricity cost of machine, yuan.
j
Tis mobile hours of one-piece, min.
E
Pis rated power of the electrical motor, kw [8].
i

is the load coefficient of the electrical motor, i

=
0.5 - 0.9 [8].
d
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
z
C
5.4.1 The General Machine Depreciation
z
t
C
1
115
60
kji ji
z
t
iiz
.SL
CT
F 




di

(6)
In the Formula (6):
z
t
Cis the general machine depreciation, yuan.
j
Sis the price of machine, yuan.
j
Lis the machine depreciation rate, about 10% per
year.
F
is the annual working time of machine, hour.
z

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
z
z
C
1
115 kji
zz ici
s
C. nN

 
 (7)
In the Formula (7):
z
z
cis the depreciable life of machine (according to the
table of depreciable life about fixed assets, is eight-
een years).
C
nis the special machine depreciation, yuan.
c
n
N is the annual yield.
The formula of the special machine depreciation has
another format like Formula (8):
1
115 k
j
ii
zz i
s
p
C. N



 (8)
In the Formula (8):
p is the percentage of depreciation and overhaul of
special machine, is
p1c n.
5.5. The Cost of Adjusting Machine
tg
C

1
ttg
tg
TL
C
N


u

 (9)
In the Formula (9):
tg
C
Lis the adjustment of special machine, yuan.
tg
Tis the wage rates of adjusting workers, yuan/h.
tis annual adjusting hours, h.
5.6. The Cost of Fixture
j
C
5.6.1 The Cost of General Fixture
j
t
C



160
ktjii i
j
td
iji ji
sab
CT
F



i



 (10)
In the Formula (10) [9]:
j
t
Cis the cost of general fixture, yuan.
tj
s
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.
j
F
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
z

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
j
z
C



1
kzjii i
jz i
s
ab
CN


 (11)
In the Formula (11) [9]:
j
z
Cis the cost of special fixture depreciation, yuan.
z
j
s
is the cost of the fixture, yuan.
5.7. The Cost of Tools
da
C
dadapj
CST (12)
In the Formula (12):
da
C
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
x
C
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.
x
C is classified into 5.8.1
the cost of repairing general machine
x
t
C and 5.8.2 the
cost of repairing special machine
x
z
C
tg
C
.
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
j
Cx

 (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
c
C54.02983
5.2 Direct labor cost
j
g
C
C
1.9874
5.3 Machine electricity cost
d0.56138
5.4.1 General machine depreciation
z
t
C 0.43104
5.5 Adjusting machine cost
tg
C0.0114
5.6.1 General fixture cost
j
t
C 0.00078
5.7 Tools cost
da
C0.25715
5.8.1 General machine repairing cost
x
t
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
jg
C
electricity cost
d
C
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
jt
/ / / /
6.2 cost jz
C / / / 0.0024 / / 0.003 /
Tools costda
C
achine
repairing cost
xt
C
achine
xz
C
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,
m
cost.
which varies by company and needs continuous im-
provement in the ar from what th
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