The Association Between Activity‐Based Costing and Manufacturing Performance

Christopher D. Ittner, William N. Lanen and David F. Larcker

Journal of Accounting Research, 2002, vol. 40, issue 3, 711-726

Abstract: This study examines the association between activity‐based costing and manufacturing performance. Results using a cross‐sectional sample of manufacturing plants indicates that extensive ABC use is associated with higher quality levels and greater improvements in cycle time and quality, and is indirectly associated with manufacturing cost reductions through quality and cycle time improvements. However, on average, extensive ABC use has no significant association with return on assets. Instead, we find weak evidence that the association between ABC and accounting profitability is contingent on the plant’s operational characteristics.

Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:bla:joares:v:40:y:2002:i:3:p:711-726

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Journal of Accounting Research is currently edited by Philip G. Berger, Luzi Hail, Christian Leuz, Haresh Sapra, Douglas J. Skinner, Rodrigo Verdi and Regina Wittenberg Moerman

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