How to Develop a Model to Overcome the Difficulties of Implementing an ABC System

In today’s competitive world of business, having accurate information may be the key factor in distinguishing between the loser and the winner. ABC helps managers make better decisions about product design, pricing, marketing, and mix and encourages continual improvement by obtaining accurate information. Compared to the traditional costing systems, ABC can not only answer how much product cost is but also tell executives the factors triggering costs and the way to manage costs. This paper presents an approach for implementing of ABC. The results of experiment shows the rates of adopting activity based costing are now similar for service firms and manufacturing firms. However, Larger company are more likely to have adopted activity-based costing than smaller company, possibly because activity-based costing is more beneficial in larger company that have a diverse mix of products or services.