Behavioral Aspects of IT Employees towards Problems and Prospects of Activity Based Costing (ABC)

N. Narsaiah

doi:10.31033/ijemr.9.2.25

Abstract

Activity Based Costing (ABC) is a new variant in cost management practices emerged in 1980’s, which caters to the needs of organizations in effective control and monitoring cost and better management of profitability. The success of ABC duly depends on articulation of implementation of ABC and the outcome of Activity Based Cost and Management (ABCM). Though employees experience a positive outcome, it is beyond doubt that they can support the ABC rather resisting the same. The main objective of this paper is to examine the perception of IT companies’ employees’ towards implementation of Activity-Based Costing(ABC). A normative list of benefits concerning the ability of ABC systems to redirect the behavior of individuals was abstract from the interviews opinion and compared to the perceived benefits gathered from interviews with firm employees. This will permit IT Companies and provides relevant information that will enable them to make better decisions with regard to measure the successful implementation of ABC in IT Companies.

Highlights

Information Technology (IT) companies seems to be functioning moderately different due to the production and services system in IT companies is divided entirely into invisible part and a lineup of visibility
Computed F-test value is compared to critical value in order to determine whether to accept or reject the hypothesis
The Hypothesis of perception of employees towards results of decision action changed by using Activity Based Costing (ABC) information is tested through ‘F’ and found the computed F- value3.506880734, which is higher than the critical value of F=2.75871047.So the hypothesis is rejected

Summary

Introduction

Information Technology (IT) companies seems to be functioning moderately different due to the production and services system in IT companies is divided entirely into invisible part and a lineup of visibility. The system fails to achieve its objectives due to the failure of other components i.e., strategic cost management for this IT companies employing modern cost management systems, such as Activity Based Costing (ABC). IT Companies may be more motivated to utilize ABC as it is ascertained accurate cost of products and services through the use of different cost driver rate, if they have a high potential for cost distortions. By placing ABC in IT Companies may have the ability to determine whether all of their stakeholders are profitable or else. It leads to IT companies business from unprofitable stakeholders to increase their margins

Objectives

Results

Conclusion