Activity-Based Costing (ABC) Implementation: Challenges and Success Factors

• Post by: deqe
• April 6, 2024
• Comments off

Udeh, P. N.¹, Eze, R. C.² & Enujioke, I. E.^3
12Department of Accounting, Federal Polytechnic, Ohodo, Enugu, Nigeria
³Department of Management, University of Nigeria, Enugu Campus, Nigeria

Abstract
Activity-Based Costing (ABC) has emerged as a revolutionary approach to cost allocation and management in contemporary organizations. This study explores the challenges and success factors inherent in ABC implementation, synthesizing empirical evidence, case studies, and scholarly insights to offer comprehensive guidance to practitioners and scholars. Challenges in ABC implementation encompass cultural resistance, data complexity, managerial support inadequacies, integration hurdles, training needs, and resource constraints. Conversely, success factors include robust leadership, clear communication, interdisciplinary collaboration, adequate training, pilot testing, and continuous monitoring. Drawing from empirical evidence, the study emphasizes the pivotal role of leadership endorsement, cross-functional collaboration, and technical infrastructure in fostering successful ABC implementation. Furthermore, implications for practice underscore the importance of tailored strategies for change management, data handling, and technology investment, while research implications highlight the need for further exploration into cultural dynamics, integration methodologies, and longitudinal impact assessments. Overall, this study contributes to advancing knowledge in managerial accounting and cost management, offering valuable insights for practitioners and researchers embarking on ABC implementation initiatives.

Keywords: Activity-Based Costing (ABC); ABC Implementation; Success Factors