Masters theses and dissertations

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Author: search.filters.author.OGALO FAITH VERONICAHStart date: 2025

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    INFLUENCE OF ACTIVITY BASED COSTING ON FINANCIAL PERFORMANCE OF SOFT DRINK MANUFACTURING FIRMS IN NAIROBI COUNTY, KENYA
    (Tom Mboya University, 2025) OGALO FAITH VERONICAH
    Soft drink companies face persistent challenges such as high operational costs, inaccurate product costing, and inefficiencies in resource allocation, which undermine profitability and competitiveness. Traditional costing systems often fail to accurately allocate overhead costs, resulting in misguided pricing strategies and resource mismanagement. While ABC was widely studied in developed economies, its application and influence on financial performance in Kenyan soft drink manufacturing firms remains underexplored. The main objective of this study were to establish the influence of ABC on the financial performance of these firms, focusing on factors such as resource management, activities identification, cost driver selection, and cost object determination. The study was grounded in three theories: resource-based view theory, signaling theory, and the balanced scorecard. A correlational research design was used, with a sample of 128managers selected through stratified random sampling from 68 soft drink manufacturing companies in Nairobi County. Descriptive statistics, including mean, frequency, standard deviation, and percentages, were employed to profile the sample and identify key data patterns, while multiple regression analysis examined relationships between the study variables, and correlation analysis will determine associations. The study reveals that effective resource management, including allocation, aggregation, and scheduling, significantly improves financial performance in soft drink manufacturing firms by reducing costs and maximizing profits. Activity identification within activity-based costing (ABC) systems enhances cost visibility and control, but further strengthening is needed. Proper cost driver selection, particularly in labor and machine-hours management, minimizes production costs and enhances efficiency. Cost object determination, supported by strong financial planning systems and cost apportionment, ensures operational efficiency and improves overall financial outcomes. The study recommends strengthening resource management, improving activity identification systems, optimizing cost driver management, and enhancing financial planning and cost object determination to achieve better cost control, operational efficiency, and profitability.