Cornerstones of the activity-based costing system:a literature review of professional perspective

This study is based on the cornerstones which forms the components of Activity-based costing. These cornerstones work together to bring about the successes that firms reap after implementing the ABC system. Firms exist mainly to gain profit by providing goods and services that will satisfy customers by delivering them with the value they demand. The cost system used by firms is therefore an essential decision to be made by the firm in question. Activity-based costing has been accepted and implemented by numerous firms who speaks so highly of it. But one will want to probe more into the system to understand the main elements that combine to form the system. This gave way to the main objective of this study to uncover and compile the cornerstones of the ABC system which has been compiled by practitioners in professional literature. The study uncovered eight cornerstones of the ABC system which work hand in hand to achieve the aims and goals of the organizational cost system. Some of the cornerstones are basic to the survival of the cost system but nevertheless, they still work in cooperation with the others to ensure a smooth running of the system. The results also established the link that exists between the cornerstones and how the correlate which each other in the process of spreading overhead costs to cost objects