A STUDY ON IMPACTS AND EFFECTIVENESS OF ABC COSTING METHOD AS A COST EFFECTIVE MEASUREMENT IN COAL INDUSTRY

Abstract

According to previous researchers, different costing method has different core competitive advantages to organizations. From the oldest to newest method, decision of managers is still affected. As a result, finding the best method to reduce the failure rates and increase the effectiveness of cost allocation is a hard question for both managers and accountants. Based on the accounting history, there are many types of costing method such as: traditional or absorption costing method, variable costing method, throughput costing method, and ABC costing method. Changes in business environments requires a better method which can help managers control their performance while still enhance the profit to organizations. Compare to previous method, ABC costing method still inherent some characters of other method but it changes a little bit to be suitable to the accounting and business environment. Instead of sharing costs equally among departments, managers filtered the most profitable products to focus on and try to increase the number of products within a cost limitation. This is why the author thinks that ABC can be evaluated as the best method to adopt in manufacturing firm especially in coal industry. Unlike developed countries in the World, Vietnamese business environment changes rapidly but some characters still maintained the same. Therefore, a statistic about the number of companies who implement ABC can reflect the effectiveness, applicability, and impacts of this method on both managerial decisions and plants’ performance.