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Activity Based Costing
Activity Based Costing. An accounting strategy in which indirect costs are allocated to products and customers through activities (cost drivers). By determining the cost price per unit for each activity, it can be calculated which products / customers cost a lot and which are low.
With ABC one can ultimately answer the following questions:
• Which customers yield the most profit
• Which products alone cost the organization money
• Which sales channels are the most lucrative?
On the basis of the results, improvement measures can be started. To apply ABC, detailed and reliable data is needed about the activities that are performed within a company. A data warehouse is often the appropriate source for this.