Activity Based Costing around the World: Adoption, Implementation, Outcomes and Criticism

Abstract

The purpose of this article is to provide systematic and critical literature review of studies related to activity-based costing around the world. The literature review covers articles from developed and developing countries and is organised to provide insights on four major aspects of ABC adoption, implementation, outcomes and criticism. The adoption of ABC is generally greater in developed countries as compared to developing countries. Among the key benefits of using ABC include better product costing that ultimately increases the profitability and competitiveness of a company. Using ABC results in greater transparency of costs which have implications for planning, controlling and decision making. Successful implementation of ABC is to deal effectively with the specific behavioral, technical and organizational factors. Most of the problems found in the literature were related to the practical, technical and system difficulties of ABC. Due to cultural and organizational issues many companies fail as techniques need modification when used in different settings.