ACTIVITY-BASED COSTING AND FIRM PERFORMANCE: EVIDENCE FROM MOUKA FOAM MANUFACTURING FIRM IN KADUNA

Abstract

This study investigates the effect of ABC implementation on firm performance. The study adopts a survey research design through the administration of a questionnaire in 5 Likert scale form. Utilizing 78 staff of Mouka Foam, Kaduna, as the study population and sample size using the census sampling method. Cronbach's alpha for reliability indicates a value of 0.858 confirms that the data collected can be trusted for statistical calculation. Statistical Package for Social Sciences (SPSS) version 25 was used in analyzing and processing data. This study finds that resource drivers and cost objects have a positive and significant effect on firm performance, while both activities and cost pools have no significant effect on firm performance. The study concludes that both activities and cost pools may not directly influence performance in the short run, while a proper assignment of cost objects and the usage of resource drivers are the keys to the optimization of firm performance. The study further recommends that activities should be strategically aligned to operational goals, and that more accurate cost pools and function-based segmenting would provide more insight into performance. Additionally, the firm should accurately identify the costing of specific cost objects (products/services) to make better-informed cost control and pricing decisions, and review and take action for the costing of resources, with actual usage patterns being taken into consideration.