ABC
Finance
ABC (Activity-Based Costing)
Activity-Based Costing
Costing method that assigns overhead to products or services based on the activities and cost drivers they consume.
Examples
- 01With ABC, the controller finds that small custom orders consume 40 % of setup and order-handling activities but only 10 % of volume.
- 02The monthly review compares ABC product costs with the old overhead rates, which had made high-volume standard parts look too expensive.
- 03After ABC shows the true cost of 200 low-volume variants, sales introduces a minimum order quantity for the least profitable ones.