Supply Chain Glossary - A

activity-based costing also activity-based cost accounting (ABC)

Syn: activity-based cost accounting.

In activity-based cost accounting, a model, by time period, of resource costs created because of activities related to products or services or other items causing the activity to be carried out.

A set of activity-based cost accounting models that collectively define data on an organization's resources, activities, drivers, objects, and measurements.

The use of activity-based costing information about cost pools and drivers, activity analysis, and business processes to identify business strategies; improve product design, manufacturing, and distribution; and remove waste from operations. See: activity-based costing.

In activity-based cost accounting, a continuing definition of activity and resource requirements (for both financial and operational systems) based on future demand for products or services by specific customer needs. Demand for resources is related to resource availability; capacity overages and shortfalls are corrected. Activity-based budgeting derives from the outputs of activity-based planning.


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