January 28, 2008
The 2nd Theme Week for 2008 - Activity Based Costing / Activity Based Management
Joel Vander Weele wrote this in the early morning:
Activity based costing (ABC) and Activity Based Management (ABM) are key tools for any organization struggling to understand the costs of doing business. ABC focuses on assigning costs based on “Activities”. Each product and/or service sold by an organization has its own unique mix of activities.
An activity is simply a step in the process needed to transform inputs into outputs needed/and or desired by a customer. The challenge in ABC is to capture the various processes, determine what the activity mix for a various product or service is, and then assign relevant costs to them. This is a complex process, which we will explore this week.
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