Browse Definitions :
Definition

ABC costing (activity-based costing)

Contributor(s): Matthew Haughn

Activity-based costing (ABC costing) is a method used to arrive at a cost price for a product – the total of direct and indirect costs required for production -- by identifying and costing all associated business activities.

A brief example of how to conduct ABC costing:

  1. Identify the business’ main activities.
  2. Identify the activities’ cost drivers -- processes and activities that determine what a given activity costs the business, such as the number of orders.
  3. Assess the costs that go into each activity.
  4. Assign product costs based on rates of use of each activity.

ABC costing management software is available from a number of vendors including Acorn Systems, proDaCapo and QPR CostControl. Activity-based costing is also a component of many enterprise resource planning (ERP) and corporate performance management (CPM) products.

ABC costing is considered a supplemental costing method rather than sufficient unto itself.

This was last updated in June 2016

Continue Reading About ABC costing (activity-based costing)

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.

-ADS BY GOOGLE

File Extensions and File Formats

Powered by:

SearchCompliance

SearchSecurity

  • computer worm

    A computer worm is a type of malicious software program whose primary function is to infect other computers while remaining ...

  • Single Sign-On (SSO)

    Single sign-on (SSO) is a session and user authentication service that permits a user to use one set of login credentials (e.g., ...

  • Certified Information Systems Auditor (CISA)

    Certified Information Systems Auditor (CISA) is a certification issued by ISACA to people in charge of ensuring that an ...

SearchHealthIT

SearchDisasterRecovery

  • business continuity plan (BCP)

    A business continuity plan (BCP) is a document that consists of the critical information an organization needs to continue ...

  • disaster recovery team

    A disaster recovery team is a group of individuals focused on planning, implementing, maintaining, auditing and testing an ...

  • cloud insurance

    Cloud insurance is any type of financial or data protection obtained by a cloud service provider. 

SearchStorage

Close