There are two main reasons why managers undertake ABC/M projects; explicitly to save costs – or more generally to provide support for decision making at both the strategic and operational level.
Initiatives to save costs may be variously described as downsizing, right-sizing, business process review, re-engineering, process improvement, shared services or a host of other titles. […]
ABC methodology has been around since early 1980s, but it’s only relatively
recently that it has begun to gain acceptance. This recent enthusiasm for the
methodology is largely because the make-up of the cost base has changed over
the last 30 years or so.
Over the last 30 years there has been a proportionate decline in direct costs and
an […]
Introduction to Activity Based Costing
In the modern business world, we are “blessed” with more management information than ever before. But how much of that information is really valuable or even useful? How much of the information that lands on our desks or arrives in our email in-boxes actually helps us to make decisions that will […]
This post contains a step-by-step illustration of a very simple ABC modeling exercise, which illustrates many of the aspects of the methodology. We will be using a credit control function as our example, for three main reasons:
• 1. Most organizations operate such a function, so it should be reasonably familiar;
• 2. Credit control is often […]
