THE IMPACT AND IMPORTANCE OF ACTIVITY BASED COSTING ON FINANCIAL PERFORMANCE OF MANUFACTURING FIRM

Abstract

The graduation project represents the results of research on impact and importance of Activity Based Costing (ABC) on financial performance of manufacturing firm. The contribution of this project is to improve the financial performance of manufacturing firm by measuring impact and importance of ABC - a way to measure changes in their productivity of manufacturing firms. The objectives of the project were to demonstrate chances in financial performance when manufacturing firms apply ABC approach. Benefits of applying ABC and factors affecting the successful performance of ABC approach will provide managers with useful information in making better decisions on evaluating the application of ABC. To achieve these above objectives, questionnaires were made and given to the financial staff of Dutch Lady Vietnam (DLV) Company. They were required to complete the questionnaires based on their understanding and perceptions of ABC related to financial performance. As can be seen, ABC has had a positive influence on improvement of financial performance at DLV. Thus by applying ABC, managers of manufacturing firms would be given more accurate information and able to take the right actions that would improve the profitability and the financial performance of a company.