Accounting

Introduction:

At present business environment changing constantly due to high level of competition among companies and technological advancement. Most of the companies are striving hard to survive and continues improvement of the product/service, to meet customer satisfaction and profit maximization. In addition, scarce resources should use effectively and efficiently to get more output with high quality. Decision makers should measure all activities properly and for that they may use activity-based costing (Hereafter referred as ABC). ABC mainly focuses on resource utilization. In addition, it measures cost by estimating all activities cost and how much of the activity uses for each unit of production (Louderback et al, 2000).

Hilton et al (2008), "To reduce the cost of goods and services, managers must modify the activities required to produce the activities" (p.147). Therefore, many companies have changed their product costing structure as well as production process. Under ABC an operation manager not only focus on production cost but also non-production overhead costs as it has increased significantly (Maelah and Ibrahim Nasir, 2007). Nowadays, most of the companies implementing ABC as it helps to measure product price efficiently compare to traditional system. That is the reason to adopt ABC once it was introduced mid-nineteen eighties, particularly among the big companies and many companies still have consideration to implement ABC in to their system.

Therefore, the primary aims of this study are followings:

a) Perception of the company to adopt/implement of ABC.

b) How does ABC helps to measure price effectively and efficiently?

References

c) Baird, K. M., G. L. Harrison and Reeve, R. C. (2004). Adoption of Activity Management Practices: A Note on The Extent of Adoption and The Influence of Organizational and Cultural Factors, Management Accounting Research, 15: 383-399

d) Cooper, R. and Kaplan, R....