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Activity Based Costing

Activity based costing provides more accurate costing information which leads to better pricing decisions and profitability analysis. It identifies the activities causing overhead costs, which can improve efficiency and reduce costs. However, it can be time consuming and difficult to identify all relevant cost drivers. Activity based management uses activity based costing data to improve processes like DPP, CPA, and distribution channel analysis. It helps management understand cost drivers and find ways to minimize costs through efficient activities, better product designs, and reducing overhead activities.

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MuhammadUmarNazirChishti
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50 views1 page

Activity Based Costing

Activity based costing provides more accurate costing information which leads to better pricing decisions and profitability analysis. It identifies the activities causing overhead costs, which can improve efficiency and reduce costs. However, it can be time consuming and difficult to identify all relevant cost drivers. Activity based management uses activity based costing data to improve processes like DPP, CPA, and distribution channel analysis. It helps management understand cost drivers and find ways to minimize costs through efficient activities, better product designs, and reducing overhead activities.

Uploaded by

MuhammadUmarNazirChishti
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Activity based costing

Advantages:
Leads to better pricing descions
Better descion making based on profitability
Abs forces us to determine what causes overheads leading us to greater effiency
and cost saving.
Disadvantages
Not always possible to identify cost driver
Time consuming and expensive

ACTIVITY BASED MANAGEMENT


It is a term gien to those management processe tat use activity based costing
analysis to improve orginisation profitability these processes rae
DPP,CPA,distribution channel profitability analysis. Abs forces us to determine
what causes overheads leading us to greater effiency and cost saving.
and gives management vital information on why cost is being incurred

Techniques used are

Improve design of product


Ensurising activities are performed effiently
Minimizing cost drivers.

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