A review of the activitybased costing system in management accounting and its behavioral considerations


This study is designed to investigate the behavioral implications of "Activity-Based Costing" (ABC) in managerial accounting. The
objective of the paper is to distinguish the major differences that exist between the ABC and other traditional costing systems. This objective is achieved through the use of an analytical framework
and with the aid of an il1ustration.
Following illustration presents the practical runifications along
with the behavioral implications of the use of ABC in both manufacturing and service oriented companies in different
countries. From the logic of the illustration, it becomes evident that ABC, as a revolutionary costing method, among other
benefits, has the capacity of being used as an effective managerial problem solving tool.
In Addition, the article presents and studies the relevent behavioral factors in the form of following four theses:
1- international, societal, and organizational climate, 2- managerial culture,
3- methods of managerial performance evaluation, and

4- existing organizational control environment.
The paper concludes that the apllication of the ABC to
different settings and utlizing its benefits, requires the fu11 recognition of its behavioral implications.