Activity-Based Costing System in the Service Sector: A Strategic Approach for Enhancing Managerial Decision Making and Competitiveness

Ashford Chea


The author begins the article by outlining a brief historical evolution of activity-based costing (ABC) in the USA
preceded by an operating definition of terminologies. Next, he presents the literature review and the
methodology employed during the study. He reviews the application of ABC in the service sector, followed by
an analysis of the unique attribute of the service sector. Moreover, the researcher briefly profiles several
service-oriented firms that have successfully adopted and implemented ABC, and presents his findings from the
study. He then addresses the limitations of ABC in the service sectors and offers strategies for dealing with these
drawbacks. Finally, the researcher outlines the managerial implications of implementing ABC in the service

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