Review:
Activity Based Costing
overall review score: 4.5
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score is between 0 and 5
Activity-based costing (ABC) is a cost accounting method that identifies activities within an organization and assigns the cost of each activity to all products and services according to the actual consumption by each.
Key Features
- Identification of activities within an organization
- Allocation of costs based on actual consumption
- Enhanced accuracy in cost allocation
Pros
- Provides more accurate cost information compared to traditional costing methods
- Helps in better decision-making by understanding the true costs of products or services
- Encourages efficiency by focusing on activities that add value
Cons
- Requires significant time and resources to implement
- May be complex for organizations with diverse product lines or services