This paper discusses the implementation issues of activity-based costing (ABC) in manufacturing. ABC has become an important aspect of manufacturing/service organizations striving for a major share in the international markets. New productivity and quality improvement strategies facilitate an increase in the awareness of ABC in present day manufacturing organizations and an appropriate framework for the management of productivity and quality. Firstly, an overview of some literature on ABC and the role of ABC in advanced manufacturing systems are presented in this paper. Then the experiences of some Finnish companies in implementing ABC are discussed. Finally, a framework for the implementation of ABC in manufacturing is presented.