The Effect of Applying Activity Based Costing System on Net Cash Flow in Manufacturing Companies in Jordan

Abstract

Activity based costing system is considered of the most important costing topic at the time due to its impact on the decision being taken by decision makers in the manufacturing companies which represent the biggest portion on the Jordanian sector.

There are too many studies have showed the importance and usefulness for applying this system.

This study aimed to show the effect of applying activity based costing system on the net cash flow (operating, investing and financing) in manufacturing companies in Jordan

To active the objective of this study, descriptive analytical method has been conducted. Study population was the employees in the manufacturing companies were in total of 87 male and female. Surveys have been distributed to 8 manufacturing companies and sample unit is (finance managers, chief accountants, and accountants), survey collected back was 100 surveys. Alongside with that, financial statements have been analyses for the years 2011-2015 in order to test hypothesis and descript the relationship between variables using the statistical software SPSS. The results revealed that:

According to results of the tests that there is statistically significant result ( 15?=0.05"> ) for the effect of the activity based costing system (ABC) on the net cash flow (operating cash flow activities, investing cash flowactivities and financing cash flow activities) in manufacturing companies in Jordan.

• According to results of the tests that there is no statistically significant result ( 15?=0.05"> ) for the effect of the activity based costing system (ABC) on the net operating cash flow in manufacturing companies in Jordan.
• According to results of the tests that there is statistically significant result ( 15?=0.05"> ) for the effect of the activity based costing system (ABC) on the net investing cash flow in manufacturing companies in Jordan.
• According to results of the tests that there is no statistically significant result ( 15?=0.05"> ) for the effect of the activity based costing system (ABC) on the net financing cash flow in manufacturing companies in Jordan.

Based on research finding the researcher gave several recommendations: 1) encourage decision makers in manufacturing companies in Jordan to improve the new standards that serves the activity based costing system that helps the management to take the proper decision.  2) Train and prepare the people who are dealing with activity based costing system and develop their skills to have the maximum use of applying activity based costing system.

Keywords: ABC , net cash flows , manufacturing companies , Jordan.