Factors Influencing ABC Implementation in Cement Sector of Pakistan

This study aims to find out the factors influencing the practices specially implementation of Activity Based Accounting (ABC) in the cement sector of Pakistan. The study is based on primary data collected through convenience sampling technique. Closed ended questionnaire has been used as data collection instrument, the reliability of which was checked through Cronbach's Alpha. The econometric tool of binary logistic model was applied for the identification of factors. ABC method classifies costs, based on various cost drivers. By implementing ABC system, indirect costs can be precisely allocated to various products manufactured in an organization; in doing so, an organization can go for cost reduction by controlling overheads. Organizational size, organizational structure, organizational culture, management behavior and technical issues were identified from preliminary literature review as important factors to have an influence on ABC practices in an organization. These factors were subsequently incorporated in the questionnaire. The results from Binary Logistic Regression suggests that from identified factors organizational size, organizational structure, organizational culture, and technical issues are not significantly influencing the implementation of ABC practices in the cement industry of Pakistan. Only management behavior is resulted from the analysis as significant influential factor in this regard. It can be concluded from the findings that behavior elements play vital role for the adoption and successful implementation of ABC system for the firm in Pakistan in case of cement sector. These findings are important for creating an insight among professionals as well academician regarding costing preferences and practices prevailing in Pakistan