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This research evaluates the effectiveness of the traditional and activity-based (ABC) Costing systems in promoting sustainable financial growth in UK-based small-medium enterprises (SMEs). Specifically, it aims to understand the differences between traditional costing and ABC systems and their impact on organizational competency and financial growth. A mixed-method approach, including qualitative and quantitative data analysis, was employed. The study concludes that ABC is the most effective costing system for promoting sustainable financial growth in SMEs. Traditional costing leads to inaccurate data and hindered management competency. ABC eliminates cost distortion, aids decision-making, and encourages long-term development. Additionally, the availability of a wider range of products/services positively impacts financial growth. While the initial implementation of ABC may be costly, it offers long-term benefits, including improved organizational competency and profitability.
Nurcombe et al. (2024) studied this question.