Exploring the Implementation of Activity-Based Costing (ABC) among Manufacturing Companies in Nigeria

This research investigates the adoption and implementation of Activity-Based Costing (ABC) within the context of manufacturing companies operating in Nigeria. The study adopted a survey method to explore the experiences, and perceptions, of employees of selected manufacturing companies listed on the Nigerian Stock Exchange. The paper seeks to provide valuable insights and recommendations to enhance the utilization of ABC among manufacturing entities in Nigeria, thereby contributing to improved cost management practices and operational efficiencies within the sector. A structured 4-point Likert scale questionnaire was administered through Google form to employees of 45 manufacturing companies selected purposively. The collected data were analyzed using descriptive statistics and the Kruskal Wallis H test. The result unveiled a prevalent practice among Nigerian manufacturing companies wherein overhead costs were not allocated to products in alignment with ABC principles; instead, the conventional approach for overhead cost allocation persisted. This was shown in the overall mean value of 2.1812, Kruskal Wallis X
²
of 1.806 with a p-value = 0.405. In conclusion, the study's outcomes indicate that ABC principles for overhead cost allocation are not commonly embraced by manufacturing companies in Nigeria. Many such companies continue to rely on traditional methods. Based on these findings, the study recommends that Nigerian manufacturing firms transition towards embracing the principles of ABC and consider enlisting consultants to provide training on its implementation.