Activity-based costing defines healthcare costs in terms of a healthcare organization's processes or activities. The costs are then associated with significant activities or events. It relies on the following 3 step process: 1) Activity mapping, which involves mapping activities in an illustrated sequence; 2) Activity analysis, which involves defining and assigning a time value to activities; and , 3) bill of activities, which involves generating a cost for each main activity.
A two-stage procedure used to assign overhead costs to products or services produced. In the first stage, significant activities are identified, and overhead costs are assigned to activity cost pools in accordance with the way resources are consumed by the activities. In the second stage, the overhead costs are allocated from each activity cost pool to each product line in proportion to the amount of the cost driver consumed by the product line.
A process-oriented approach to accounting that starts by determining how much it costs to perform each activity and then adds up activity costs to determine process costs, an so forth. The idea is that you add together all the costs in a complete value chain, subtract the costs from the income for the product or service produced by the value chain, and determine the profit on the process.
An accounting method for estimating the price of a product or service that links costs to products based on the activities consumed in producing the products or services. See also activity cost.
A set of accounting methods used to identify and describe costs and required resources for activities within processes. [GAO
Activity-based costing (ABC) aims to provide a dynamic and realistic means of calculating the true cost of doing business. It precisely allocates direct and indirect costs to particular products or customer segments.
A form of cost accounting that focuses on the costs of performing specific functions (processes, activities, tasks, etc.), rather than on the costs of departments or units. Activity-based costing generates more accurate cost and performance information related to specific products and services than is available to managers through traditional cost accounting approaches.
A methodology that measures the cost of activities, assigns resources to activities and assigns activities to cost objects based on their use, and recognizes the causal relationships of cost drivers to activities.
A method to plan, measure & control expenses associated with managing & monitoring the supply chain specific techniques for assigning cost in business processes to activities.
An accounting system that measures the cost and performance of specific activities performed in an organization.
an accounting system that assigns costs to products based on the amount of resources used to design, order or make a product.
Activity-based costing (ABC) is an information system that maintains and processes data on a firm's activites and products. It identifies the activites performed, traces cost to these activites, and then uses various cost drivers to trace the cost of activities to products.
An accounting method used to identify and describe costs and resources for activities and tasks within a process.
(ABC) A system for making business decisions based on cost information of fundamental business activities as tasks related to product design, development, quality, manufacturing, distribution, customer acquisition, service and support. ABC is sometimes considered a form of business process re-engineering as it insists on surfacing a manageable number of cost drivers that can be used to trace variable business costs to customer, products and processes.
Activity-based costing (commonly shortened to “ABCâ€) is a system of costing which recognises that costs are incurred by each activity that takes place within a business and that products (or customers) should bear costs according to the activities they use. The use of ABC requires the identification of “cost drivers†– those activities that take place in a business that cause costs to be incurred. The costs associated with these cost drivers also need to be identified so that they can be appropriately allocated to each activity being costed.
A method of cost management that identifies business activities performed, accumulates costs associated with these activities, and uses various cost drivers to trace costs of activities to the products.
An accounting method that enables a business to better understand how and where it makes a profit.
A business practice in which costs are tagged and accounted in detailed activity categories, so that return on investment and improvement effectiveness can be evaluated. Implementing ABC requires proper data structures, and an adequate data reporting and collection system involving all employees in the activity.
Method of assigning indirect costs to products and services
An accounting technique that allows an organization to determine the actual cost associated with each product and service produced by the organization without regard to the organizational structure.
A technique for allocating costs to a product, service, customer, etc. The premise is that activities cause an organization to incur costs. Once the cost of the activities have been identified and each activity's cost has been determined, the cost of the activities is then allocated to the product, service, customer, etc. that required the activity. This technique is more logical for allocating overhead than simply allocating costs based on machine hours or direct labor hours. To learn more, see Explanation of Activity Based Costing (ABC). To Top
Syn: activity-based cost accounting.
Activity-based costing (ABC) is a method of allocating costs to products and services. It is generally used as a tool for planning and control. This is a necessary tool for doing value chain analysis.
