THE EXTENT TO WHICH ACTIVITY BASED COSTING SYSTEM AFFECT FINANCIAL PERFORMANCE OF SMES: DESKTOP STUDY

The purpose of the desktop study research was to establish the extent to which Activity Based Costing System affect Financial Performance of SMEs. We have located the research of this paper within a qualitative approach (Gay 1992; Babbie 1998; Leedy & Ormrod 2013). This decision was informed by the fact that this paper is not interested in the quantification of data. But its main interest lies in the painting of qualitatively rich picture of the phenomena being studied within the context of limited respondents” (Hall 2007; Maserumule 2011; Baugh & Guion 2016). To this end, the problem of this study is explained descriptively and theoretically for the purpose of generating a crispy understanding of the extent to which Activity Based Costing System affect Financial Performance of SMEs. In terms of data collection, the authors sourced and reviewed literature on the topic. Among others, this source included journal articles, books, magazines and newspapers. The results obtained from this study revealed on statistical insignificance on effect of ABC system and cost control. The researchers observed a negative correlation relationship between ABC system and cost control. As observed, when activity-based costing increases cost control decreases the vice versa. Therefore, there was no improvement in the cost control and cost reduction meaning that improvement in costs.