ACTIVITY-BASED COSTING PRACTICES IN SELECTED FOOD MANUFACTURING FIRMS IN TEMA METROPOLIS

ABSTRACT

Adherents of ABC systems claimed traditional management accounting systems generated misleading costs in a contemporary, tumultuous, often changing business environment and implementing ABC would remedy this. That is why activity-based costing (ABC) represents the symbol of improved competitiveness and efficiency in every organization. The purpose of this study analyzing the existing literature in the field – is to emphasize that new cost system such as ABC could be a strong couple that assures competitiveness and efficiency for each company. Another objective is to present that, besides its disadvantages, firms implement the ABC system because it permits better tracing of costs to objects, superior allocation of overheads to cost objects, financial and non-financial analysis and measures useful to managers and management accountants in the decision making process. The objective of the study it to access activity-based costing practices in selected food manufacturing firms in Tema metropolis. Data collection presents the type of data, source of data, instrument for data collection, instrument validity, and instrument structure to meet the research objectives and procedure for data collection. Thereafter, data collected was analyzed using the Statistical Package for Social Science (SPSS) to help in explaining further the responses of the respondents in relation to the study. In summary the analysis of data from respondents, it revealed that even though Activity- Based Costing is of great benefit to its implementers, it also has its own difficulties as well. The most important motive for implementing or considering ABC as well as its benefits are that it provides insight into cost causation which helps in cost reduction and control. The benefits of Activity- Based Costing should be made known to other firms to encourage them to use it too.