Activity Based Costing (ABC) Adoption Status - A Focus On Manufacturing Industry In Malaysia

Abstract

ABC has been studied from various perspectives for quite some time in many countries. Even though studies have shown that the adoption of ABC benefits the organizations, its level of adoption is still considered low. Many organizations hang on to the traditional cost accounting methods in dealing with overhead costs. This study looks into the usage of plantwide, departmental, and ABC for the costing of overhead costs among manufacturing organizations in Malaysia. The focus is to determine the status of ABC adoption in this country. It is found that most organizations under study use a combination of two or more overhead costing systems. The study also found that ABC adoption among manufacturing organizations in Malaysia is at an infancy stage, with 36 percent adoption rate. Furthermore, among those that adopt the ABC system, most are still at the early stage of implementation.