What Is Activity-Based Costing ABC? Explanation & Example

The implementation of an activity-based costing system is a pre-requisite for every program, including re-engineering as well as the improvement of business processes (see article). Additionally, many businesses use ABC data to fulfill the measurement requirements of a balanced scorecard (see article). For example, the labor and resources required to manufacture a mass-produced industrial robot…

Activity-Based Costing Calculation Steps and Example

This complexity can make it hard for small businesses with limited staff and resources. Performing detailed activity analysis and assigning costs requires time, effort, and expertise. This example demonstrates how the activity-based costing process traces overhead to the products based on activities rather than arbitrarily spreading costs. According to ABC, an activity can also be…