Activity-based costing is a modern technique used for overhead absorption, and it was developed between the decades of sixties and eighties. According to this method, indirect costs are allocating among various departments on the basis of profits derived by each of them. The contemporary issues of the management accounting are evolving to help and provide information to the managers in a new business environment. It also helps an organization to survive in the competitive, ever-changing world, because it provides an important competitive advantage for an organization that guides managerial action, motivates behaviors, supports and creates the cultural values necessary to achieve an organization’s strategic objectives. As an organization, the degree of adaption with the new techniques or procedures it depends successful.