Factors affecting the application of ABC costing method in manufacturing firms in Vietnam

Abstract

In the current market economy with fierce competition, the number of newly established businesses is increasing, but the number of businesses that are unprofitable or have low profit also accounts for a large proportion. Accordingly, one of the main reasons for low operational efficiency is an outdated management method and low-cost efficiency. Previous studies on cost management focused primarily on traditional cost methods. Different from previous stud-ies, this study explores the relationship between the application of the cost-based method (ABC costing-method) and the improvement of business performance in manufacturing firms in Ho Chi Minh City. The authors conducted quantitative research by analyzing the Structural equation modeling (SEM) with AMOS - SPSS with secondary data collected from the survey of managers of 620 firms. The research results show that if businesses make good use of the ABC costing-method, their business performance will be significantly improved.