Factors influencing activity based costing (ABC) adoption in manufacturing industry

Ruhanita Maelah, Daing Nasir Ibrahim

Research output: Contribution to journalArticle

13 Citations (Scopus)

Abstract

In the 1980's much criticisms were raised regarding the ability of traditional cost accounting to provide relevant, timely, and accurate information to the management. During that period, ABC has emerged as one of the management accounting tools that recognizes such concern. Since then ABC has gained its popularity and has received substantial attention from various parties including the academicians, practitioners, and industries. ABC has also been studied from various perspectives for quite some time in many countries. Literatures are enriched with studies that have argued that the adoption of ABC benefits organizations. Unfortunately, studies have also found that the level of ABC adoption is still considered low. Many organizations still use the traditional cost accounting methods in dealing with overhead costs. This study investigates the status of ABC adoption among manufacturing organizations in Malaysia, and the factors influencing its adoption. Mail survey questionnaires were distributed to manufacturing organizations throughout the country using purposive judgment sampling. The questionnaires were directed to the accountants or heads of accounts of selected manufacturing organizations. The study found that ABC adoption in Malaysia is at infancy stage, with 36% adoption rate. The factors that influence ABC adoption are decision usefulness of accounting information, organization support, and internal measures of performance.

Original languageEnglish
Pages (from-to)113-124
Number of pages12
JournalInvestment Management and Financial Innovations
Volume4
Issue number2
Publication statusPublished - 2007

Fingerprint

Activity-based costing
Influencing factors
Manufacturing industries
Manufacturing organizations
Cost accounting
Malaysia
Questionnaire
Influence activities
Factors
Criticism
Accounting information
Overhead costs
Usefulness
Sampling
Management accounting
Industry
Mail survey
Accountants

Keywords

  • Activity based costing
  • Adoption
  • Decision
  • Internal measures
  • Organization support

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management
  • Economics and Econometrics
  • Finance

Cite this

Factors influencing activity based costing (ABC) adoption in manufacturing industry. / Maelah, Ruhanita; Ibrahim, Daing Nasir.

In: Investment Management and Financial Innovations, Vol. 4, No. 2, 2007, p. 113-124.

Research output: Contribution to journalArticle

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