Through traditional costing methods there is a high probability that some products will receive more costs than they should. This is because there is no clear distinction between the activities that generate the cost and the products associated with it. Activity Based Costing (ABC) was created to identify key differences in cost–creation activities and to more accurately allocate costs to their cost driver (Kinsella, 2002, p. 52). There are major benefits associated with using an ABC system, so why don't more companies use it? Straight-forward in theory, ABC proved more difficult to put into practice. Instead of gaining more ground with companies, ABC fell to the wayside, because most companies viewed it as extremely cumbersome. Once at the top of Bain's List for management tools, it has now fallen to the 22nd slot (Easier than ABC, 2003, p. 1). Now with the economy at an all time low, companies are re-examining ABC to see if it can help them to align the activities with the cost they produce. For a company to succeed with ABC they need to look at the companies who have implemented an ABC system successfully, those who have been unsuccessful with ABC, and try to make a determination if an ABC system is right for their company.
             Advocates of ABC describe it as one of the greatest tools in management accounting, working wonders for all that ails an organization (Tatikonda, 2003, p. 1). Several companies have implemented an ABC system successfully and reaped many benefits from it. After the 09/11/2001 tragedy most airline companies had losses exceeding $10 Billion. Not Southwest Airlines, they sustained their record of 30 years of annual profits and they attributed much of their success to their ABC system (Sherrat, 2003, p. 60)
             Many companies expected the heydays of the 90's to end and prepared for it by installing an ABC system deep into their organizations. This helped managers to understand what ...