CMA
Comprehensive study of cma covering fundamental concepts and advanced applications.
Advanced Topics
Activity-Based Costing (ABC)
A Modern Approach to Costing
Activity-Based Costing (ABC) assigns costs to products and services based on the activities they require.
How ABC Works
- Identify major activities in the organization.
- Assign costs to these activities.
- Allocate activity costs to products or services based on usage.
Why Use ABC?
ABC gives a more accurate picture of product costs, especially when products use different resources.
Real-World Results
ABC helps companies identify profitable products and cut unnecessary spending.
Examples
A hospital uses ABC to understand the true cost of patient care in different departments.
A tech company discovers some software features cost more to maintain than they earn.
In a Nutshell
ABC links costs to activities for more precise product costing.