Relevance and Applicability of Activity Based Costing: An Appraisal



Abstract: In today’s cutthroat and recurrently changing business environment, firms require to be cautious of the impacts of the changes in the business environment and develop appropriate strategies to survive and flourish.One pioneering costing method designed to deal with dearth of traditional costing systems is Activity Based Costing (ABC). Activity Based Costing can drastically change how managers determine the mix of their product line, price their products, identify the location for sourcing components, and assess new technology. Activity Based Costing is supposed by practitioners and academics as the normative appropriate cost system, and demonstrates its superiority over traditional absorption costing. This study tries to evaluate the relevance and potential applicability of Activity Based Costing (ABC).


Keywords: Activity Based Costing, traditional costing systems.

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