Activity Based Costing System and Nigeria’s March towards VISION 20: 2020

Amaechi Patrick Egbunike, Chinedu Francis Egbunike, Meduoye Olamide Mofolusho

Abstract


The paper examines the need to develop Activity Based Costing Systems (ABC) in accounting practices among manufacturing firms in Nigeria as a tool for product costing as Nigeria marches to the top 20 economics of the World come 2020. With the aid of a structured questionnaire, a total of 50 copies of questionnaires were administered to a cross-section of Accountants, Managers and Auditors in the manufacturing sector but only 45 copies were returned. T-test of difference between means was used to statistically test hypotheses one, two and three. Based on these, the study found among other things that there is extreme low adoption of ABC among manufacturing firms in Nigeria, possibly because of low level of ICT. Secondly, ABC improves efficiency, reduces operational costs, and properly cost products better than traditional cost accounting systems. The implication of these on the study is that in this era of Advanced Manufacturing Technology (AMT) and ICT development, traditional cost accounting systems used decades ago when the manufacturing sector was labour intensive and less automated may no longer give the required result. This should give way to Activity Based Costing system, an offshoot of the new manufacturing innovation with capabilities to cost product properly, recognizing causality and transactions involved. Consequent upon these, the study recommends that with expectations of the country to march towards a vision of attaining the height of top 20 economies of the world, Activity Based Costing systems are the challenges we need to face now. The system is in tandem with progressive ideas and new way of thinking in accounting in the manufacturing sector.


Full Text: PDF DOI: 10.5539/ibr.v6n11p168

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This work is licensed under a Creative Commons Attribution 3.0 License.

International Business Research  ISSN 1913-9004 (Print), ISSN 1913-9012 (Online)

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