----John Innes*, Falconer Mitchell† and Donald Sinclair
This paper studies the change of activity-based costing (ABC) adoption status in largest companies in UK according to surveys did in 1994 and 1999. The paper also studies the levels of importance and success that ABC users put in and why some companies did not use ABC.
ABC is important in management accounting and many companies paid attention to ABC. With the adoption of ABC, some problems should be concerned. In this paper, concepts that influenced the adoption rate, patterns and success of ABC are the main issues should be considered. More specifically, what influence the reduction of ABC adoption rate and attraction of ABC according to comparing two surveys about largest companies over 5-year period is important to explore. The success of ABC system is important for both ABC adopters and non-adopters to consider whether continue use or choose to use ABC system. Besides, the attitude of non-adopter also should be analysis to help improve ABC.
For most surveys, the data they got always cannot represent the real situation because they major focus on one position at one time. Thus the data collected from these surveys is not common to know the ABC adoption. However, if did two surveys at different years as comparison, the changes and trends of ABC adoption rate and other information such as success of ABC can be known more clearly. Chosen some largest companies in UK as objects is also helpful to get enough usable answers. These all make the data that collected more diversity and representative. According to this kind of data, the facts and conclusions in this paper is more believable and acceptable. To show the data collecting from two surveys, using tables is a brief way.
For the first result of ABC study, it focused on the adoption rates of ABC from adoption status and relationship between company sectors and sizes. It analysis the adoption status from two opposite parts. One is the situation that companies use and are interested in ABC. The surveys showed that the amount of it has no increase during that 5 years. Instead of that, the proportion of ABC potential users and current users have both decreased. The other one is the situation that the amount of companies rejected ABC after doing survey in 1999 and even not considered it had increased. For the pattern of ABC adoption according to two surveys, the financial sector takes up a high adoption rate of ABC over the all 3 sectors and largest companies have higher ABC adoption rate.
The second result of surveys study is about the design and implementation of ABC.
In the paper showed that the in-house accountants of companies are the major designers of ABC system. The rate of adoption software also increased from 24% to 58% over the 5 years. For the time that companies working with ABC, it grows up from 3.7 to 5.4 years on average as well. In this paper, there are three forms of ABC using. Over the 5 years, the amount of companies using ABC system in pilot testing only and in parallel with their pervious costing system does not have significant change, however, the form that using ABC system takes up the majority. These all indicate that the ABC is still popular for largest companies in UK.
The third result of surveys is about the purposes, importance rating and success rating of using ABC system. In both surveys, companies all had multiple purposes. The cost reduction, product pricing, performance improvement and cost modelling are the main purposes for adopters of ABC applications which all above 60%. For the rate of importance of ABC system, it should be paid attention to the use of ABC for other applications because the rate of it is very (5)