Expectations and Limitations of Activity Based Costing Application in Small and Medium Sized Enterprises

In present study we examine application of activity-based costing (ABC) in small and medium-sized enterprises (SMEs). We want to investigate circumstances which determine whether ABC will improve performance and competitiveness of the in small and medium-sized enterprises. The main objectives of our study are to determine effects (expectations) and limitations of the application of ABC in small and medium-sized enterprises. In addition to other factors, the expected benefits and potential limitations are the key factors of ABC future implementation, potential performances improvement and competitiveness of in small and medium-sized enterprises. The analysis is conducted on a sample of 33 enterprises in the small and medium-sized enterprises sector in Serbia. Study shows that the key benefits of ABC implementation are performances improvement and providing more accurate information. Also one of the most important obstacles to wider application of the ABC in the in small and medium-sized enterprises is the lack of professional knowledge and practical experience