Effects of product diversity on activity-based costing system implementation in Nigeria

Product diversity facilitates a higher possibility for cost distortion and applies when products consume activity-resources in different proportions. Greater product diversity requires more complex costing systems to capture the variation in resource utilization by different products (Ahmadzadeh, Etemadi, & Pifeh, 2011). Activity-based costing system represents one of the complex costing system innovations. Using a survey research design, this study examines the effects of product diversity on activity-based costing implementation in the Nigerian manufacturing sector. Data were obtained using structured questionnaire administered to 500 Accountants, Cost Accountants, Management Accountants and Financial Managers who are in full-time employment of 24 randomly selected manufacturing firms listed in the Nigerian Stock Exchange. The result of regression analysis revealed that there is a significant relationship between the extent of activity-based costing implementation and product diversity in the Nigerian manufacturing sector. It is recommended that future studies should seek to investigate the influence of other contextual variables such as top management support and competition.