A note on ABC implementation : an evaluation case

Abstract

Whilst featuring prominently in management accounting research for at least the last decade, activity-based costing (ABC) may have reached a plateau in terms of implementation and success. This paper reports the results of a survey of activity-based costing (ABC) in a telecommunication organisation. The study considers ABC information and systems being used in various parts of division of the company. It reports on success measures adapted from the Foster and Swenson (1997) survey of ABC implementation. The survey data was collected through a questionnaire to users of ABC sent through the company's e-mail system. 243 questionnaires were sent out for the 16 different ABC systems developed, 173 usable questionnaires were returned (a response rate of 71%). The respondents were selected based on their experience in using the various ABC systems irrespective of the divisions they operated in. They were mainly senior executives and executive level employees. The study is reported in four parts. Firstly, it reports on the usage of ABC information as compared to the traditional costing systems. It was found that budgeting, improving opportunities and aiding in product management decisions were highly scored as the main usage of ABC/M information. The second part reports on decision actions taken as a result of ABCIM implementation. It states that ABC/M helped change in company's strategic focus, pricing strategy and changes in operations. Interestingly, it was found that ABC implementation provided almost no financial improvements, as perceived by respondents. Finally, the overall evaluation of the ABC systems is perceived by the users of the various ABC systems was to be -mostly unsuccessful. A comparison of the survey results is made with the Foster and Swenson (1997) survey. The work is hoped to make a contribution to studying ABC implementation success in various settings