Activity Based Costing in Bangladesh: An Empirical Study of the Level of Sophist ication

Abstract

Cost and management accounting environment has been changed radically with the Avent od advanced manufacturing technologies, fierce competition, shortening life cycle, Strategic alliances and so many other parameters. Aptly, there is a paradigm shift of accountant 'role and duties in a corporate set up than ever before. To address the need ofmanagement, the best tool developed so far in cost and management accounting arena is Activity Based Costing (ABC). ABC is a technique of charging product for the consumption of resources scientifically and thus attracts the researchers from multiple fields. How the firms in developing countries like Bangladesh are interfacing with this . a question of research. Thus, this study picks up the issue of surveying the application status of ABC in Bangladesh. At the same time, the research targets to study the level of sophistication achieved by Bangladeshi firms. The successful implementation of ABC requires sophistication in terms of skill, commitment, maturity and team-building. The studies on ABC and sophistication are abundant in literature that helps the researcher to develop the conceptual framework and research methodology. Both primary and secondary sources are explored to make the research findings worthy. A semi: structured questionnaire is administered to give the research a practical look. Multiple linier regression, stepwise regression and logistic regression is used to draw inferences .For judging qualitative issues, exploratory factor analysis is conducted with relevant methodologies of reliability and validity tests. The research concludes that cost driver, cost pool and cost pool_driver interrelationship explains the level · of sophistication in a better way that supports the basic norms of ABC. It also supports the proposition that ABC system is a sophisticated system and traditional system is unsophisticated. The findings of the research add values to the current state of knowledge and will work as a future reference for researches that will be done in the related areas.