Using an activity-based costing system to improve the operations of an organization
A system of management that seeks to optimise the value added activities performed by the enterprise while at the same time minimising or eliminating the non-value added activities, resulting in overall improvements in the effectiveness and the efficiency of the enterprise in serving its customers.
An approach to the management of activities within processes as the route to continuously improve both the benefit received by customers and the efficiency with which the service or product is provided. Causes of activities are identified, measured, and used along with other activity information for performance evaluation; emphasis is on the reduction or elimination of non-value-adding activities. Activity-based management draws on activity-based costing data as a major source for information.
Activity-based management (ABM) is the use of the activity-based costing tool by process owners to control and improve their operations. Because process analysis is conducted in the building of an activity-based cost model, management knows its business much better and can consequently evaluate value-added and non-value-added activities. Because a certain volume of work produces a certain outcome, What if analysis can be conducted to determine what resources are required of operations are scaled back or expanded.
The application of activity-based costing to improve business performance.
The use of ABC data to ascertain the efficiency or profitability of business units, and the use of strategic initiatives and operational changes in an effort to optimize financial performance.
Using the information generated in activity-based costing to plan and control activities and processes. To Top
The use of activity-based costing information about cost pools and drivers, activity analysis, and business processes to identify business strategies; improve product design, manufacturing, and distribution; and remove waste from operations. See: activity-based cost accounting.
Activity-based management (ABM) is a method of identifying and evaluating activities that a business performs using activity-based costing to carry out a value chain analysis or a re-engineering initiative to improve strategic and operational decisions in an organization. Activity-based costing establishes relationships between overhead costs and activities so that overhead costs can be more precisely allocated to products, services, or customer segments. Activity-based management focuses on managing activities to reduce costs and improve customer value.
