Ahmed Abdullah Saad Al-Dhubaibi
Ibrahim Kamal Abdul Rahman
Mohd Nizal Haniff
Faculty of Accountancy
Universiti Teknologi MARA, Malaysia

Zuraidah Mohd Sanusi
Accounting Research Institute and Faculty of Accountancy
Universiti Teknologi MARA, Malaysia

 

The objective of this research is to investigate the implementation of activity based costing (ABC) in the Telecommunications Sector. It aims to examine the level of success that has been achieved and factors associated with it. It aims also to identify the challenges and issues that have been encountered by the telecommunication company (the case study) in implementing ABC, and the benefits obtained from its implementation. Methodology of a case study has been used for this research where the data are collected through face to face interviews, files and documents review. Findings indicate that XYZ company has been moderately successful in implementing ABC. Critical success factors that have been associated with the implementation of ABC are top management support, linkage to the competitive strategy, consensus about and clarity of objectives, training, and adequacy of resources. The most prominent challenges and issues that have encountered ABC implementation are factors related to the system’s complexity and employees’ reactions. The findings eveal a negative impact on ABC’s successful implementation. They are:-, 1.non-finance (accounting) department’s reservation about usefulness of ABC, 2. difficulties in defining cost drivers, and 3. Difficulties in allocating cost to each product and service. One implication of this research is that ABC implementation can be successful in the specialised service companies such as telecommunications. Another implication is that companies which intend to implement ABC successfully should place more importance on and give more attention to the behavioural and organisational factors.