activity-based costing

Also found in: Acronyms, Wikipedia.

Activity Based Budgeting

A way to budget that analyzes potential activities in which a company can engage. These activities are organized according to the company's goals, and the costs of each are organized to compile the budget. ABB contrasts with traditional budgeting, which usually simply increases the previous year's budget to account for inflation and the like; rather, ABB seeks out new opportunities and allocates resources in the budget based on them. Proponents say that ABB is a more accurate way to forecast budgeting.

activity-based costing

a system of product costing which seeks to break down the divide between FIXED COSTS and VARIABLE COSTS by looking at the total cost to the business of making a product. All costs are related to cost drivers - the factors which influence the cost of a product.

Activity costing is suggested as an alternative to STANDARD COSTING, which analyses labour costs in detail and tends to share out overheads between products by reference to the direct labour hours involved in making different products. However, in automated factories, where labour is a relatively unimportant part of the total product cost, such detailed analysis of labour may not be justified and direct labour costs may be an inappropriate basis for analysing overheads. For such automated plants activity costing may be preferable, focusing as it does on the forces driving the costs of being in business.

References in periodicals archive ?
The possible way of the simplification of the system is the application of time-driven activity-based costing system (TDABC).
Time-Driven Activity-Based Costing is an innovative model available to organizations interested in having a clearer grasp of the costs and profits involved in delivering products and services to their clients.
Acorn Systems, the leading provider of solutions that enable companies to measure, analyze and improve their profitability and performance, was featured as the Platinum sponsor and solution-of-choice for enabling Time-Driven Activity-Based Costing.
For those programs and services that the agency knows it must provide and produce, activity-based costing and business process reengineering are used to move forward.
SAP's investment in ABC has produced a war room approach to activity-based costing because only a select few managers have access to the system.
A Framework for Assessing Cost Management System Changes: The Case of Activity-based Costing Implementation at General Motors, 1986-1993.
In the section on activity-based costing software like that provided by ClearTrial, Wu makes several important points:
However, vendors such as Hyperion, Armstrong Laing Group and SAS Institute (see table in the third column) are taking this integration to the next level by integrating activity-based costing into their applications.
We've seen firsthand what a change in monitoring can do, as activity-based costing was implemented around here in 1999.
Sandy Spring National Bank has selected PMG Systems to provide analytical software and professional services for a major activity-based costing initiative.
Such integration in turn has led to a resurgence of interest in topics such as performance measurement, process improvement, and activity-based costing.
a technology company that provides activity-based costing and performance management software solutions for the healthcare industry, today announced that Memorial Healthcare System, headquartered in Hollywood, Florida, has signed a multi-year license agreement to implement the ExactCost([R])Cardiovascular Service Line.

Full browser ?