INDIVIDUAL PROJECT: IMPLEMENTATION OF ACTIVITY BASED COSTING IN MALAYSIA FATIN NUR AMALINA BINTI AHDON A

INTRODUCTION  Based on the article wrote by Jamaliah Abdul Majid and Maliah Sulaiman, the activity-based costing (ABC) has been lauded, among others reasons, as a tool to help allocate overheads with a greater degree of accuracy.  The article describes ABC implementing in two different types of organization, a telecommunication company and a manufacturing organization.

JURNAL REVIEW  ABC has been used for many purposes, such as product-range decisions, customer profitability analyses, cost reduction, cost modelling, budgeting, inventory valuation, and performance measurement.

The problems of ABC implementation  High set-up cost occurred.  There is no time available to implement ABC.  The lack of available skills.

The study was examining ABC implementation in American company(CM)  CM has its own costing department with a costing manager in charge of the overall ABC system.  The factor that motivated CM to implement ABC is to improve the company’s strategic product pricing and facilities its process improvement.  There four phases of implement ABC in CM.

The study also examining ABC implementation in Malaysia company(TM)  ABC is gradually introduced in company, starting with the network or engineering department, followed by the marketing department and eventually, the support group department.  The factors that motivated TM to implement ABC were competition.  By implement ABC in Malaysia company (TM), the company was able to reduce wastage and rework time.

CONCLUSION  We can conclude that both of TM and CM have been successful in implementing ABC.  Both companies regard ABC as an important tool in cost reduction and process improvement.

MY OPINION  Based on the review, I can see that both of TM and CM have been successful in implementing ABC.  I also learned the benefits of implement ABC in a company.  I also learned the “Do’s” and “Don’ts” of ABC implementation that have to be noted by every company that implement ABC.

 Implementing ABC can be a challenging task for any business and the process carries several advantages and disadvantages.  To overcome these disadvantages, the company should do ABC in a good way and take note the “Dos and Don’ts” in implement ABC.

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