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    Activity-Based Costing, ABC

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    What are some applications of ABC? How would this method influence a company's business process? Consider its impact on e-commerce, service, retail, and manufacturing. What are the potential dowsides of ABC?

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    ABC method was developed when there was a tremendous change in manufacturing and service industries:
    - A decrease in amount of direct labour usage.
    - Significant increase in total overhead costs.
    - May be inappropriate to use plant-wide predetermined overhead rates based on direct labour or machine hours when a lack of correlation exists.
    Complex manufacturing processes may require multiple allocation bases; this approach is called Activity-Based Costing (ABC).

    It is defined as an overhead cost allocation system that allocates overhead to multiple activity cost pools
    and, Assigns the activity cost pools to products or ...

    Solution Summary

    This posting looks at several issues that revolve around Activity-Based Costing.