Abstract
Activity-Based Costing (ABC) was developed by Robert S. Kaplan in the mid-1980s and up to now the academics, researchers as well as accounting practitioners have perceived it as the normative appropriate cost system. It has been considered as a method to overcome the shortcomings of the traditional costing. However, the application the new method as ABC is a challenge for Vietnamese companies because most of them have used traditional costing for calculating product cost. Changing from traditional costing system to ABC system will face many difficulties. In the fierce competitive business environment, along with the growth of Vietnamese companies – it means that the production of product diversity, machinery and equipment invested more and more modernly and automatically, leads indirect costs increasing and major proportion in total costs. These characteristics are suitable for the application of ABC method to calculate product cost and provide information for management. In addition, increasing of pressure from consumers and competitors force Vietnamese businesses to find a more modern approach to help them achieve advantage competition and increase profitability. Thus, application of ABC method is need for Vietnamese companies. This paper attempts to find obstacles to ABC application and suggests solutions for ABC diffusion and implementation in Vietnam.