Introduction Activity-based costing (ABC) is a costing method designed to provide managers with cost information for strategic and other decisions that potentially affect capacity and therefore on "fixed" and variable costs. Activity-based costing is used primarily for internal decision making and management activities, while traditional costing is used to provide data for external financial reporting. Most organizations use activity-based costing as an additional system to use traditional absorption costing as sometimes the traditional costing system misleads the profitability of the product. In a company there are many products for sale, if a product is sold at a high price with a low product margin, and a product with a high product margin at a low price, it may result in a loss. Furthermore, because cost drivers and business activity may change, activity-based cost analysis also needs to be reviewed periodically. This amendment should be made to change the pricing, product, customer focus and market share strategy to improve business profitability. Important factors leading to successful implementation of activity based costing Companies today are trying to introduce activity based costing into their system, however, some companies fail to implement it, which subsequently leads to abandonment of the ABC system. According to the research, the reason for the failure of ABC implementation in People's Bank of China is due to lack of clear business purpose on implementation, lack of education on ABC, poor design of ABC model, lack of participants, individual and organizational resistance to change, and few available outsourcers. To solve these problems, top management support and cross-functional involvement...... middle of paper ......ionActivity-based costing is used as a supplement to traditional cost accounting in a company to support the manager in internal manufacturing decisions. It focuses on assigning indirect costs to direct costs in order to get a more accurate cost on products. Activity-based costing uses several cost pools rather than just one in traditional cost accounting. The system is easy to implement and offers numerous benefits, as it allows the company to respond to inefficiencies by reallocating resources towards more profitable activities from areas that absorb too many resources. It also allows the company to respond to overall manufacturing costs and more accurately price products on products in order to achieve greater profits. Companies that do not have in-house expertise to conduct activity-based cost analyzes might consider hiring one or seeking help from the company that provides these types of services.