QUESTION 2 (20 MARKS)

THE SURVEY SAYS Professors John Innes, Falconer Mitchell, and Donald Sinclair have conducted two surveys designed to study ABC adoption trends within the United Kingdom across a five-year time span. The profes-sors' initial survey results are based on responses from 352 of the U.K.'s largest companies, while the follow-up survey results obtained five years later are based on responses from 177 of the U.K.'s largest companies. The initial survey results indicated that 21% of respondents were currently using ABC, 29.6% were considering ABC adoption, 13.3% had rejected ABC after considering its implementation, and 36.1% were not considering ABC. Five years later the follow-up survey showed that 17.5% of re-spondents were currently using ABC, 20.3% were considering ABC adoption, 15.3% had rejected ABC after considering implementation, and 46.9% were not considering ABC. The professors summarized their findings by saying "These results are indicative of no growth in the popularity of ABC, and are consistent with both a leveling off in interest in it and the adoption of it over this five-year period." Source: John Innes, Falconer Mitchell, and Donald Sinclair, `Activity-Based Costing in the U.K.'s Largest Companies: A Comparison of 1994 and 1999 Survey Results," Management Accounting Research, September 2000. pp. 349-362.

Based on the above survey findings, discuss the issues, challenges, and solutions in relation to the implementation of Activity-Based Costing by the companies.