Activity-based costing in Singapore manufacturing companies.

Abstract

Traditional accounting methods allocate costs to products based on the volume of production. With automation and the development of modern methods of production, direct labour was reduced and traditional volume-based methods of overhead allocation became outdated. Activity-based costing (ABC) was introduced as a more appropriate approach to allocate overhead costs to products. ABC is based on the assumption that is the activities and processes performed within the organization which add cost and value to the products and services. Though a lot of attention has been given to ABC in the West, there seems to be a lack of research on the system in Singapore. The extent of knowledge of ABC and its adoption in Singapore thus forms an interesting topic.