Effect of Activity Based Costing On Financial Performance of Cement Manufacturing Industry in Kenya

Abstract

In East Africa, Kenya is leading in both cement production and consumption. There are around 8 cement companies in Kenya. Three of these companies are listed at the Nairobi security exchange. Cement companies that are listed at NSE are Bamburi cement, ARM cement limited, East Africa Portland cement limited. Private companies are Mombasa cement, National cement, and Savannah cement. Competition amongst cement manufacturing is getting tough due to higher demand and supply in the real estate industry therefore companies are much interested in assessing financial positions to get or retain higher market share. This study focused on the effect of activity-based costing on financial performance of manufacturing industry in Kenya. The study used both qualitative and quantitative research method. The target population of the study was100 middle level management. The study used primary source of data that was collected through questionnaire that consisted of structured questions. Quantitative data was collected analyzed through descriptive analysis and SPPSS presentations was presented through percentages, means, standard deviations, and frequencies. The information was displayed by use of frequency tables. The study findings revealed that financial performance of manufacturing industry in Kenya was significantly related with activity-based costing. The activity-based costing had positive influence on performance. The study concluded that activity-based Costing (ABC) have positive influence on cement manufacturing firms as it enhances cost reduction which portent a high increase in profit and overall performance of an organisation.