Exploration of Factors Influencing on Choice the Activity-Based Costing System in Iranian Organizations

Abstract

As a tool for planning and control, costing systems play a considerable role in providing information needs for managers. Given the diversity of costing systems and simultaneous advancement of new costing systems, choosing a costing system may challenge managers. This research seeks to explore such organizational factors as organization size, industry type, cost structure, the importance of cost information, and products and services diversity on adopting Activity-Based costing (ABC) system in the listed companies of the Tehran Stock Exchange. Using logistic regression model from 33.5% of respondents in the sample, the results of this survey study indicates a positive relationship among cost structure, the importance of cost information and products and services diversity (in term of products and services liner numbers). It also indicates a negative relationship among the type of industry, organization size and product and services diversity (in terms of support diversity and volume diversity) with adopting the mentioned system. There was not any significant relationship between above organizational factors and choice of the ABC system

Corporate Governance on the Corporate Characteristics- Managerial Accounting link

“…The observed variables are traditional budgeting (KTQT1), cost volume profit analysis (KTQT2), variance analysis (KTQT3), activity based costing (KTQT4), total quality management (KTQT5) and balanced scorecard (KTQT6) (Hyvonen, 2005;Al-Omiri and Drury 2007;Lucas, 1997 (DTDN2) is estimated with a three-point scale that includes three levels with 1.manufacturing sector, 2.manufacturingservice sector and 3.service sector (Brouthers et al, 2002;Taha et al, 2011). Corporate interdependence (DTDN3) is measured with a three-point scale (Ibadin and Imoisili, 2010;Chenhall and Morris, 1986).…”

A Simplified Activity-Based Costing Approach for SMEs: The Case Study of an Italian Small Road Company

“…In addition to these difficulties, it is necessary to add variables that may challenge ABC implementation related to contextual factors, such as strategy, organizational structure, competition, environmental uncertainty and product diversity (Gosselin, 1997;Al-Omiri, 2011). Among these, company size becomes relevant for ABC adoption (Ahmadzadeh et al, 2011), which is more expensive and labor-consuming to implement and maintain, respect to traditional systems, in an operational context which is "less complex" as that of SMEs. Moreover, in SMEs, training and software requirements may even prohibit its adoption (Özyürek and Yılmaz, 2016) and managers could be let down by time and effort to develop ABC (Needy et al, 2003).…”

The Predictive Impact of Contextual Factors on Activity-based Costing Adoption

“…The stage of a country's economic development for the company investigated significantly influenced ABC adoption rates (Askarany and Yazdifar, 2012). In economically developed countries, companies adopted ABC at higher rates than companies in less economically developed countries (Ahmadzadeh et al, 2011;Al-Omiri and Al-Qura, 2012;Askarany et al, 2010;Schoute, 2011).…”

“…Although empirical evidence exists to support ABC's positive role in improving company performance, productivity, and profitability (Askarany, Yazdifar, and Askary, 2010;Elhamma, 2012;Jankala and Silvola, 2012), on average, global ABC adoption on average has not exceeded 20.00% worldwide (Al-Omiri and Al-Qura, 2012;Askarany et al, 2010;Charaf and Bescos, 2013;Nassar, Al-Khadash, Sangster, and Mah'd, 2013;Schoute, 2011). Researchers determined that ABC is adopted at higher rates in developed countries (Askarany and Yazdifar, 2012) than in undeveloped countries and that the importance of cost information is predictive and positively associated with ABC adoption (Ahmadzadeh, Etemaldi and Pifeh, 2011;Askarany et al, 2010;Charaf and Bescos, 2013;Schoute, 2011).…”

“…In over two decades, researchers found significant variability in ABC adoption rates ranging from as low as 4.00% (Drury and Tayles, 2000) to as high as 78.00% (Baird, Harrison, and Reeve, 2004). Factors identified as contributing to the variability in ABC adoption rates include: operationalization of ABC adoption (dichotomous vs. user determined: Al-Omiri and Drury, 2007b;Askarany et al, 2010;Krumwiede, 1998), industry sector (manufacturing vs. service: Ahmadzadeh et al, 2011;Askarany et al, 2010;Schoute, 2011) and the country investigated (developed vs. undeveloped: Askarany and Yazdifar, 2012). Empirical investigation into the impact of contextual factors predictive of ABC adoption including; intensity of competition, product diversity, cost structure, organizational size, and the importance of cost information were unable to determine a consistent relationship with ABC adoption (Ahmadzadeh et al, 2011;Al-Omiri and Drury, 2007b;Charaf and Bescos, 2013;Nassar et al, 2013;Schoute, 2011).…”