Determinants of and Barriers to the Adoption of Activity-Based Costing for Manufacturing SMEs in South Africa’s Emfuleni Municipality

Rosebud Rundora, Jacob Selesho


Activity-based costing is an accounting system instituted by large firms for allocating costs to specific products based on the resources that they consume. Since its inception, there have been significant benefits derived from the implementation of activity-based costing systems by large firms, however its acceptance by the small firms have prompted some doubts among its non-user. While some small firms have accepted the use of activity-based costing systems, this paper seeks to establish the barriers that foster negative perception among the non-user. This paper reports on the study of 48 small manufacturing firms in the area of southern Gauteng, South Africa, which made use of the quantitative research approach, while the survey method was chosen for data collection in the selected small manufacturing firms operating in the area. These firms were selected from the Emfuleni municipality in the southern region of Gauteng. The respondents were requested to respond to the questionnaire on their perceptions and experiences regarding the application of activity-based costing. They were asked to indicate the barriers that impede their adoption of ABC. Furthermore, non-users were asked to indicate their reasons for not having adopted the system. The paper reveals the differences in the perception of ABC users and non-users, even though the study found that four of eleven 11 barriers of implementing ABC are rated significantly higher by the non-users. The highest ranking barrier among other non-users was a lack of knowledge concerning ABC. Other non-user raised the challenge in defining cost drivers as well as identifying activities. Finally, at the end potential recommendations of the study are made for future research.

DOI: 10.5901/mjss.2014.v5n3p30

Full Text: PDF

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

Mediterranean Journal of Social Sciences ISSN 2039-9340(Print) ISSN 2039-2117(Online)

Copyright © MCSER-Mediterranean Center of Social and Educational Research

To make sure that you can receive messages from us, please add the '' domain to your e-mail 'safe list'. If you do not receive e-mail in your 'inbox', check your 'bulk mail' or 'junk mail' folders..