ABC Costing to see correctness

Most of the private own companies are tending to apply ABC costing to see correctness of their unit price over competitive products. For example Emerald has implemented ABC method and identified over costing of traditional method finally they gain competitive advantages by reducing unit cost. Cost reduction is a global trend while looking for error in the existing costing method to avoid over costing of unit rate. so there are tendency of applying ABC method to calculate their unit cost. But still there are lot of organizations specially government own organization such as Sri Lanka Transport Board, Ceylon petroleum corporation ,Sri Lanka railway are need to be pushed  to implement  ABC cost method to calculate fair overhead unit rate so that proper calculation of unit cost in order to make them profitable organization.   

There are some barriers of implementing ABC method in Sri Lanka as well. Some of he limitation are  is listed below .

·         High Cost of implementation and difficulties to convince management about the importance of ABC method over traditional system.

·         Lack of expertise has lead to high cost.

·         Resistance to change. Most of the middle and top management in both private and government organization are preferred to continue with the existing system rather than the taking challenge  to go for new system.

·         The responsible management team for cost department are comprised of accounting  background people and there are not willing go for complex mathematical system.

There is lack of competitiveness among the product has lead to limited thinking for new system