Academy of Accounting and Financial Studies Journal (Print ISSN: 1096-3685; Online ISSN: 1528-2635)

Abstract

The Impact of Adopting Activity Based Costing (ABC) On Decreasing Cost and Maximizing Profitability in Industrial Companies Listed in Amman Stock Exchange

Author(s): Eman Ahmad Al Hanini

The current study aims at demonstrating the role of the Activity-Based Costing system (ABC) in cost reduction and profitability maximizing in the industrial companies listed on the Amman Stock Exchange. It also attempts to identify the availability of infrastructure and the potential to adopt and implement the activity-based costing system in these companies. A questionnaire was designed and distributed to the survey sample of 59 respondents who worked in industrial companies as company managers, financial managers, accountants and internal auditors. After using the statistical analysis program SPSS, the study concluded that adopting and implementing the activity-based costing system in the industrial companies play a good role in reducing costs and maximizing profitability. The results also reveal that some Jordanian industrial companies have the infrastructure to adopt and implement the system to a medium degree while other companies lack any of these components. The study recommended the importance of applying the activity-based costing system to the allocation of manufacturing overhead costs and the importance of supporting the company's management to implement this system.