The Impact of activity-based costing on firm performance : the Australian experience

The objectives of this exploratory study are to develop a scale that best capture the perception of the practitioners related to activity-based (ABC) costing, and subsequently, develop a model that predicts the impact of perception of ABC on overall firm performance. The Cronbach’s alpha shows apparent superiority of the scale. The factor analysis finds four dimensions, namely, overall performance, strategic cost allocation method, increased efficiency and increased effectiveness having the factor loadings of over ±0.3. The regression results are positive and significant at the 5% level. This study suggest that the developed scale can have significant implications to capture the perception of ABC and that the perception of ABC in terms of strategic cost allocation method, increased efficiency and increased effectiveness has significant effect on firms’ performance.