ABSTRACT
This chapter investigates the application of western management accounting theories and techniques in Chinese enterprises, and looks at Chinese accountants' comments on their usefulness. Technically, enterprises can design their own costing systems. In most of the enterprises, costs are sub-classified as direct materials, direct labour, and overhead. The Cost-Profit-Volume (CVP) model was introduced into China at the end of the 1970s. It seems that the CVP has been accepted by most Chinese enterprises. There are reasons for the acceptance of the CVP technique in China: The model is technically rather than ideologically oriented; The Chinese economy is open to outside markets and enterprises are becoming more market oriented; and the CVP technique is easy to understand and practice. In China there are two different budgeting approaches: the Chinese traditional budgeting approach and the western master budget. There are three cost approaches used in western countries: traditional costing, modem costing and activity-based costing.
