Activity-based Costing Implementation Research Articles

THE RECEPTIVENESS PUZZLE: UNDERSTANDING WHY SMALL FAMILY BUSINESSES STRUGGLE WITH ACTIVITY-BASED COSTING ADOPTION

This study examines the challenges associated with the adoption of activity-based costing (ABC) in a small family business in a less developed country. Through a case study of PT XYZ, a logistic company, the study found that technical factors, including unpredictable customer requests, varying duration of activities, and uncertainty around distance and fuel consumption for each truck, make adopting the ABC method challenging. Organizational factors, such as a top-down hierarchy and the negative perception of the owner affecting the rest of the hierarchy, also contribute to the non-acceptance of ABC. Additionally, key agents within the company did not demonstrate enthusiasm toward changes. The cultural and contextual factors and unique characteristics of small family businesses further make them less receptive to adopting new ideas or changes, including the ABC method. This study offers practical implications for introducing changes, such as improving data collection processes, establishing better communication channels with family business owners, and seeking external expertise or advice from professionals with experience in family business management. The study expands the current discussion on ABC implementation and contributes to the family business literature by linking family business characteristics with the adoption of the ABC method.

The Activity-Based Costing System Applied in Higher Education Institutions: A Systematic Review and Mapping of the Literature

Objective: In recent years, management accounting in higher education institutions has undergone significant changes due to the various New Public Management (NPM) reforms. One of the management accounting tools that has been advised to HEIs is Activity-Based Costing (ABC). With this evolving field of research, this article aims to analyze research in international scientific journals focusing on ABC in HEIs. To this end, this article provides an overview of how research in this area has evolved. We present an overview of the past, present, and future of research in the field of the ABC model applied in HEIs. Methodology: Through a systematic literature review, the Web of Science and Scopus databases were used as a source of articles. Our analysis is based on a total of 139 articles. We used a systematic literature review combining different bibliometric techniques. These allowed us to develop a mapping of the literature on the application of the ABC model in HEIs, which helps us better understand the research related to the topic and its evolution. Results: It is concluded that the existing literature on this topic has developed along three lines of research: implementation of ABC as a cost-control method, TDABC as a time-based cost-control method, and the application of the ABC Method in health services. Originality: Based on the results found, this article identifies avenues of research that can be explored, namely the study of the application of ABC in the education sector, and provides a research agenda for future studies.

Factors affecting the adoption of activity-based costing in a South African state university

Orientation: There is a lack of empirical studies regarding the adoption and implementation of the activity-based costing (ABC) system in South African state universities, despite its advantages.Research purpose: This study reports the perceptions on the factors influencing the adoption of ABC held by finance and academic staff at the Durban University of Technology (DUT), KwaZulu-Natal.Motivation for the study: The lack of empirical studies demanded understanding of those factors that influence the adoption of ABC at state-owned universities in South Africa. Therefore, this study examined the factors influencing the adoption of ABC in a South African state university using the DUT as a case study.Research approach/design and method: The study adopted a mixed research method conducted with 202 staff members: 129 academics, 41 heads of departments and 32 finance staff.Main findings: The positive factors influencing the adoption of ABC included the organisational strategy, information technology, decision usefulness of cost information, contextual orenvironmental factors and the organisational structure. However, the systems adaptability theme was considered a barrier to the adoption of ABC.Practical/managerial implications: The information could inform strategic initiatives related to the adoption and implementation of ABC in the university or similar state-funded universities.Contribution/value-add: The study provided an empirical understanding of the factors that would hinder and assist the adoption and execution of the ABC system.

Implementation Activity-Based Costing & Time-Driven Activity-Based Costing: A Systematic Literature Review

This study aims to determine the implementation of ABC in the business sector and TDABC in the business and health company sectors. This research was conducted by reviewing the literature contained in various studies on the implementation of Activity-Based Costing (ABC), and namely Time-Driven Activity-Based Costing (TDABC). Based on the literature review conducted in this study, the implementation of Activity-Based Costing (ABC) in the business sector can increase profitability and competitiveness for companies, while the implementation of Time-Driven Activity-Based Costing (TDABC) in the business and health company sector can increase efficiency and make more accurate decisions and the application of TDABC also shows improvements in the weaknesses of the ABC system.

Evaluating the Efficiency of Activity-Based Costing in Modern Manufacturing Enterprises

This research paper investigates the efficacy of Activity-Based Costing (ABC) in modern manufacturing enterprises, aiming to enhance cost accuracy and decision-making processes. Through a mixed-methods approach, including literature review and case study analysis, the study evaluates the implementation of ABC in manufacturing enterprises and compares its results with traditional costing methods. Findings reveal that ABC provides more accurate cost allocations and overhead rates, leading to improved profitability measures for products. The analysis underscores the significance of ABC in enabling better resource allocation, pricing strategies, and product mix optimization, thereby enhancing competitiveness and profitability in modern manufacturing environments. However, challenges such as implementation complexity are acknowledged, suggesting the need for investment in training and resources to maximize the benefits of ABC. The implications of the study highlight the importance of adopting ABC for sustainable growth and performance excellence in manufacturing enterprises. Future research directions include exploring advanced technologies to enhance ABC's effectiveness, longitudinal studies to assess long-term impact, and comparative analyses across industries and regions to guide cost management strategies for future challenges.

Improving the Allocation of Indirect Costs Using the FABC Method (Based on the Example of a Paper and Cardboard Manufacturing Company)

Every enterprise seeks to determine as accurately as possible the cost of the products or services it produces. The allocation of indirect costs causes considerable difficulties in this process. In the search for the most accurate alternatives for allocating indirect costs, the Activity Based Costing (ABC) method has become more popular in recent decades and is increasingly used by companies. The ABC method has many advantages, but it also has disadvantages, which have led to further development of the method by proposing newer versions. These include Fuzzy Activity Based Costing (FABC), which reduces the risk of uncertainty in data collection conditions and inaccurate cost allocation. However, while the literature provides a theoretical model of the FABC approach, there is very little research focused on sector-specific companies. Given that the issue of indirect cost allocation is particularly relevant for manufacturing companies, this paper explores the possibilities of applying the FABC method in manufacturing companies, using the example of a paper and cardboard manufacturing company. The aim of the research: after revealing the principles of ABC and FABC implementation, to improve the indirect cost allocation process in a paper and cardboard manufacturing company using the FABC method. The methods used for the study were document analysis, observation, conversation, interview, and fuzzy set analysis. The results showed that the FABC method has lower cost drivers for some activities and higher cost drivers for others than the ABC method. The improvement path developed for the allocation of indirect costs using the FABC approach could serve as a good model for its implementation in other manufacturing sectors.

PENGARUH PENERAPAN ACTIVITY BASED COSTING (ABC) TERHADAP MANAJEMEN BIAYA PRODUKSI, PRODUKTIVITAS PERUSAHAAN, DAN EFISIENSI PERUSAHAAN

<p align="justify">This study aims to analyze the influence of the implementation of activity-based costing (ABC) on the management of production costs, productivity and efficiency of the company. The research method used is qualitative with case studies in several manufacturing companies that have implemented the ABC system. Data collection is done through in-depth interviews with production managers, analysis of financial statements and direct observation of the production process. This study was conducted for 6 months, from January to June. The results show that the implementation of ABC has a significant impact on the company's production cost management. With ABC, companies can more accurately determine the cost of production for each activity involved, helping to make resource allocation decisions and control costs more accurately. Furthermore, the adoption of ABC is also associated with increasing the company's productivity. With a better understanding of production costs, companies can optimize production processes and improve overall operational efficiency. However, this study has some limitations, including limited case study and focus on qualitative data. The implication of this study is the importance of how companies view the implementation of ABC as a tool to improve cost management, productivity and operational efficiency in order to gain a competitive advantage. </p><p> </p><p><strong>Keywords</strong>: Activity Based Costing, Production Cost Management, Company Productivity, Company Efficiency </p>

Activity Based Costing Method As The Basis For Determining Service Rates In The Radiology Unit At Royal Prima Hospital Medan

Determining the tariff for radiology examination services is a very important decision, because it can affect the profitability of a hospital. Activity Based Costing is a system of accumulating costs and charging costs to products using various cost drivers by tracing the costs of each activity and then tracing the costs from activities to products. The purpose of this study was to determine the application of the activity based costing method as an alternative to CT Thorax service rates in the radiology unit at RSU Royal Prima Medan. The data analysis technique used in this study is a non-statistical quantitative analysis technique. Data in the form of numbers obtained from RSU Royal Prima Medan which contains the calculations are then analyzed using the ABC (Activity Based Costing) Implementation theory. The results showed that the unit cost for CT Thorax examination in the radiology unit of RSU Royal Prima Medan using the activity based costing method was Rp. 1,646,693. The real cost of a CT Thorax examination at the radiology unit of the Royal Prima Medan General Hospital is Rp. 1,897,500. There is a difference in the cost of CT Thorax examination at the radiology unit of RSU Royal Prima Medan with unit costs using the activity based costing method and using real cost calculations at RSU Royal Prima Medan with a cost difference of Rp.250,809. The results showed that the unit cost for CT Thorax examination in the radiology unit of RSU Royal Prima Medan using the activity based costing method was Rp. 1,646,693. The real cost of a CT Thorax examination at the radiology unit of the Royal Prima Medan General Hospital is Rp. 1,897,500. There is a difference in the cost of CT Thorax examination at the radiology unit of RSU Royal Prima Medan with unit costs using the activity based costing method and using real cost calculations at RSU Royal Prima Medan with a cost difference of Rp.250,809. The results showed that the unit cost for CT Thorax examination in the radiology unit of RSU Royal Prima Medan using the activity based costing method was Rp. 1,646,693. The real cost of a CT Thorax examination at the radiology unit of the Royal Prima Medan General Hospital is Rp. 1,897,500. There is a difference in the cost of CT Thorax examination at the radiology unit of RSU Royal Prima Medan with unit costs using the activity based costing method and using real cost calculations at RSU Royal Prima Medan with a cost difference of Rp.250,809.

Implementation of Activity-Based Costing In Calculation of Cost of Production: Participatory Action Research

Implementation of Activity-Based Costing In Calculation of Cost of Production: Participatory Action Research

The Implementation of Activity-Based Costing on Black Rice Supply Chain in Sleman District, Yogyakarta

As the primary rice consumers, Indonesians, especially people in Yogyakarta, particular consumers progressively changed their carbohydrate intake from white rice to black rice because of human health benefits. Consequently, from 2015 to 2018, Yogyakarta black rice farm extended its arable land, production, and productivity to fulfill the demand. The research aims to help the actor of business to supervise the activities, wasting higher costs and reducing the profit by analyzing the logistics cost structure along the black rice supply chain with Activity-Based Costing (ABC). The results found that the highest cost proportion of farmers (63.57%), farmer groups (69.97%), and distributors (50.47%) take place in the material handling activity. In comparison, retailers spend most of the cost on inventory activity (64.29%).

The Impact of the Activity-Based Costing on SMEs’ Financial Performance in Lusaka, Zambia (II)

While several studies have been conducted regarding the impact of Activity-based costing (ABC) system on the financial performance of a firm, to a larger extent they were focused on large enterprises who are mainly established in developed economies. There have been very few studies focused on small and medium sized enterprises and specifically those in the developing/emerging economies. This project therefore sought to explore the impact of Activity-based costing on the financial performance of small and medium sized enterprises based in Lusaka, Zambia, being a developing economy. The specific objectives of the study were to investigate the relationship between Activity-based costing and financial performance in SMEs based in Lusaka, the impact of the implementation of ABC in SMEs on cost control and cost reduction, and the reasons why the majority of SMEs have not adopted the use of the ABC system. An analysis of the responses from 20 participants in the survey revealed that only seven respondents (35%) had implemented the ABC system, while the other 13 (65%) were still using a traditional costing system. The study further revealed that all the SMEs who had adopted the ABC system had reported a positive impact on their financial performance, as well as on cost control and cost reduction. Furthermore, the study showed that there were three major reasons that the respondents indicated for not adopting the system, namely being satisfied with the traditional costing system (53.85% of the respondents), the high cost of implementing the ABC system (30.77% of the respondents), and lack of expertise to implement the ABC system (15.38% of the respondents). The contribution of this study to the body of knowledge is that the findings will contribute to the understanding of the impact that the adoption and implementation of the ABC system has on the financial performance of SMEs particularly those based in Lusaka, this being the first study on this topic. In addition, the findings of the study will contribute to the understanding of the reasons for low implementation of the ABC system among SMEs in Lusaka.

The Impact of the Activity-Based Costing on SMEs’ Financial Performance in Lusaka, Zambia (I)

While several studies have been conducted regarding the impact of Activity-based costing (ABC) system on the financial performance of a firm, to a larger extent they were focused on large enterprises who are mainly established in developed economies. There have been very few studies focused on small and medium sized enterprises and specifically those in the developing/emerging economies. This project therefore sought to explore the impact of Activity-based costing on the financial performance of small and medium sized enterprises based in Lusaka, Zambia, being a developing economy. The specific objectives of the study were to investigate the relationship between Activity-based costing and financial performance in SMEs based in Lusaka, the impact of the implementation of ABC in SMEs on cost control and cost reduction, and the reasons why the majority of SMEs have not adopted the use of the ABC system. An analysis of the responses from 20 participants in the survey revealed that only seven respondents (35%) had implemented the ABC system, while the other 13 (65%) were still using a traditional costing system. The study further revealed that all the SMEs who had adopted the ABC system had reported a positive impact on their financial performance, as well as on cost control and cost reduction. Furthermore, the study showed that there were three major reasons that the respondents indicated for not adopting the system, namely being satisfied with the traditional costing system (53.85% of the respondents), the high cost of implementing the ABC system (30.77% of the respondents), and lack of expertise to implement the ABC system (15.38% of the respondents). The contribution of this study to the body of knowledge is that the findings will contribute to the understanding of the impact that the adoption and implementation of the ABC system has on the financial performance of SMEs particularly those based in Lusaka, this being the first study on this topic. In addition, the findings of the study will contribute to the understanding of the reasons for low implementation of the ABC system among SMEs in Lusaka.

The implementation of activity-based costing by a local government: an actor-network theory and trial of strength perspective

PurposeSome public sector organizations have decided to implement activity-based costing (ABC), a new cost calculation device and management accounting innovation initially designed for the private sector. The purpose of this study is to better understand the translation of this new calculation device in the context of a local government and to identify the trials of strength that actors faced during the implementation.Design/methodology/approachBuilding on actor-network theory and the concept of “trial of strength,” this study examines how a major change in a large local government’s structure, the merger of several cities, led to the adoption of ABC. This case study provides a setting for conducting a longitudinal analysis of the translation of a cost management innovation, ABC, in a public sector organization.FindingsThis study highlights how human and non-human actors interact when implementing a management accounting innovation in a local government and the trials of strength that they face. It also shows that although ABC helped the local government deal with issues such as setting fees, assessing outsourcing opportunities, increasing accountability and improving processes, the oversophistication of the technology used to implement the ABC model and the lack of links between the costing device and the budgeting process provoked a struggle among these two networks, leading actors to choose the budget over ABC.Originality/valueThis study’s findings extend the work on trials of strength of Christensen et al. (2019) and Laguecir et al. (2020). While those two studies focused on the struggles existing between opposing networks of human actors regarding the strategic orientation or the mission of public sector organizations, this study highlights that trials of strength may also occur when actors agree on the objectives of the new accounting innovation but not on how it is implemented.

Study on Implementation of Activity-Based Costing (ABC) System on Determination of Indirect Costs in Ship Production

Currently, business development, especially in the maritime sector, has quite rapid progress in Indonesia. Recently, the shipbuilding industry's development is an effort to improve competitiveness with the global market. With the increasing development of the shipbuilding industry in Indonesia, cost accounting as a cost information system is challenged to develop the shipbuilding industry, requiring high product quality. This matter requires the company to decide on proper budget planning not to experience losses. Activity-Based Costing (ABC) System is a system to determine costs using activities to classify costs to produce indirect costs that are more systematic and relevant. Activity-based costing systems identify resources in each department's activities to provide information about a product's cost. It collects indirect costs and allocates them to various products in proportion to the product volume. Therefore, activity-based costing can estimate the product costs and individual activity costs used in the production well. The first step is classifying activities, associating various costs with various activities, determining homogeneous cost groups, and determining group rates. The second step of this stage is the determination of overhead prices selected from each cost group. This research compares indirect costs to the construction of 2x1800 HP tugboat ships according to traditional cost accounting methods with the Activity-Based Costing System method. The first method's result is 3,432,920,043 IDR and the second method is 2,231,760,472 IDR.

Measuring the Success of Activity Based Costing within the Enterprise Resource Planning Environment in Greek Companies

Activity-based costing (ABC) is a strategic tool that can enhance all processes and functions of an organization once it is implemented successfully. This study aims to examine the ABC implementation success in Greek companies in major sectors of the economy. A web-based questionnaire was conducted between February 2020 to January 2021 and collected data from 102 companies found in major sectors of the Greek economy. ABC implementation success was assessed across five dimensions, namely, general attitude toward the implementation process, technical and technological characteristics, impact on organizational process, perceived usefulness in improving job performance, and perceive ease of use. Further, this study compared companies that fully implemented ABC to those that still practice traditional cost accounting (TCA), assessing factors that influence ABC success within Enterprise Resource Planning (ERP). Findings from this study show that a successful integration among ERP and ABC can minimize the operation costs and enhance the competitiveness of the enterprise. In particular, the findings indicated that the degree of ABC within ERP implementation success positively motivates the extent of its use, enhances user performance, increases productivity, and increases user satisfaction with the system. This study contributes to the existing literature since there has been limited research on measuring the success of ABC within ERP implementation in Greek companies. Further, it provides theoretical and practical insights about factors that might influence the success implementation of ABC within ERP that can be applied to other countries. Overall, entities with ABC implementation have improved outcomes relative to those with TCA.

Implementation of Activity-Based Costing and Activity-Based Variance Analysis in Food Industry

Activity based costing assings overheads to products with convenient drivers and makes costs of products visible on activities level. Activity based variance analysis approaches reveals variances on product and activity level. Activity Based Costing and Activitiy based variance analysis are tools methods for continuous improvement and cost management. Study aims to apply activity-based costing and activity-based variance analysis in food industry. First stage covers observation and data collection period. Implementation preiod starts with activity-based budgeting process. Than, overheads assigned to products following activity-based costing steps than using activity-based variance analysis approaches variances are calculated. Activity-based costing implementation results provided evidence that overheads consist important part of food costs. Activity-based variance analysis results revealed that variances on activity and product level.

Impacts of activity-based costing on organizational performance: evidence from Thailand

PurposeTo extend the limited yet conflicting results of prior studies, this paper hypothesizes and statistically tests alternative, structurally different models of likely positive impacts of activity-based costing (ABC) on organizational performance (OP). It also tests moderating effects of business type and business size.Design/methodology/approachTo test the models' abilities to explain the data, this comparative study uses survey data from 191 Thai firms, measures validated in the study and structural equation modeling (SEM).FindingsExtensive use of ABC for cost analysis, cost strategy and cost evaluation directly improves operational performance (OPP); it also indirectly improves financial performance (FP) through improving OPP. The results are similar for manufacturing and non-manufacturing firms and for large firms and small-medium enterprises (SMEs).Research limitations/implicationsFuture studies could test the alternative models in other geographical and industrial contexts and could widen the range of control variables.Practical implicationsMonitoring of the effects of ABC use on OPP is crucial to achieving positive financial outcomes. The cross-functional nature of ABC is apparent; for it to be effective managers must ensure cooperation from departments and employees involved in the design and implementation of ABC systems.Originality/valueThis research arbitrates prior inconsistent findings by adopting an original approach of testing structurally different models in a single comparative study, using measures validated in the study. It provides new evidence that extends knowledge about impacts of ABC on OP. Further, it demonstrates its applicability in the context of developing economies.

Problems with Activity-Based Costing Implementation in Polish and Lithuanian Companies

The research purpose was to examine the problems of companies in implementing Activity-Based Costing and, in particular, to analyze the differences in assessing the level of these problems perceived by organizations using the system, considering its implementation, those which had not considered it, and those which had rejected it. The research showed that the problems with ABC implementation seen by adopters were considerably smaller compared to the other groups. A similar difference was noted between enterprises that were considering the implementation of the ABC system (and not considering it at all) and those that rejected it. The last group perceived implementation problems to be bigger than was the case in the groups which were still considering implementation or had not considered it at all. The findings seem to support the view that companies are making ABC implementation decisions rationally. On the one hand, when the problems perceived during implementation are relatively small, the company adopts ABC. On the other hand, when a company perceives the implementation problems as being quite significant, it rejects the implementation. In the middle of the scale are companies considering the implementation of ABC and others that are not thinking about it at all. They assess the perceived problems as moderate and are not in a position yet to decide for or against ABC implementation. There could also be an alternative explanation for the research results. It may be the case that companies, which have not implemented ABC overestimate the implementation problems.

Appearance, Disappearance and Reappearance of Activity Based Costing: A Case Study from a Sri Lankan Manufacturing Firm

The purpose of this paper was to identify why activity based costing (ABC) implementation in organizations at times do not continue despite their early interest, but later regain importance. Using the qualitative case study approach, the paper explored the reasons for the appearance, disappearance and reappearance of ABC drawing field data from a Sri Lankan porcelain manufacturing firms, called Gamma. Guided by the theoretical underpinnings of the Actor-Network Theory (ANT), and the translation process therein, we follow organizational managers (human actors) and their interactions with various objects and systems (non-human actors) within the particular context of Gamma, during the different phases of the ABC project. Our findings suggest that the appearance, disappearance and reappearance of ABC have been shaped by a network of actors comprising both humans and non-humans, and that the implementation and continuation of ABC is constrained by the interests of these various actors both inside and outside of the firm. While most prior research has focused on a single phase of ABC implementation, such as the success or the failure, this study brings out its reappearance, following a phase of appearance and disappearance, hence it is a useful addition to prior literature. Furthermore, the findings of this research have important implications for practitioners who are striving to revive projects, such as ABC in organizations. Keywords: activity based costing, appearance, disappearance, reappearance, actor-network theory, case study

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

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.