Activity Based Management (ABM)

Also referred to as activity based cost management (ABCM). This is used to describe the cost management application of ABC.

• To implement ABM, system, only the first three of the four stages of ABC system are required.  These are;
• Identifying the major activities that take place in an organization
• Assigning costs to cost pools or cost centers for each activity.
• Establishing the cost driver for each main activity.

 

ABM visions the business as a set of linked activities which eventually add value to the customer. It concentrates on managing the business on the basis of the activities which make up the organization. It depends on the premise that activities consume costs. Hence by managing activities costs will be managed in the long run.

The goal of ABM is to enable the customer to be satisfied while making fewer demands on the organizations resources. The measurement of activities is a key role of the management accounting function. In particular activity cost information is useful for prioritizing those activities that need to be studied closely so that they can be eliminated or improved. ABM is used in a variety of business applications such as cost reduction, benchmarking, activity based budgeting and performance measurement.

Posted Date: 12/8/2012 6:04:19 AM | Location : United States

Ask an Expert

Related Discussions:- Activity based management, Assignment Help, Ask Question on Activity based management, Get Answer, Expert's Help, Activity based management Discussions

Write discussion on Activity based management
Your posts are moderated

Write your message here..

Related Questions

Determine the current ratio - liquidity ratios, Current ratio Meaning:... Current ratio Meaning: this ratio establishes a relationship among current assets and current liabilities. Objective: the objective of computing these ratios is to calcu

The role of computers in simulation, The Role of Computers in Simulation ... The Role of Computers in Simulation Computers can be used to: 1) To generate the random numbers 2) To simulate thousands of trials. This is done extremely fast, accuratel

Limitations of abc analysis, LIMITATIONS OF ABC ANALYSIS However ABC an... LIMITATIONS OF ABC ANALYSIS However ABC analysis is a basic tool for exercising selective control over many inventory items, it does not, in its current form, allow precise con

Calculate the net operating income , calculate the net operating income ,  ... calculate the net operating income ,  evergreen corp has provided the following data: sales per period 1000 units ,selling price $ 40 per unit , variable manufacturing cost 12 p

Decision - making, Decision Making Some managers appear to have an... Decision Making Some managers appear to have an intuitive sense of good decision making. The reality is that good decision making is hardly ever done by intuition. Consist

Assigment, taking the role of a consultant, discuss the factors you would c... taking the role of a consultant, discuss the factors you would consider in selecting a suitable accounting system solutio for a small to medium enterprise. i has to be 1200 q\work

Study guide , The following information pertains to Fairways Driving Range,... The following information pertains to Fairways Driving Range, Inc.: The company is considering operating a new driving range facility in Sanford, FL. In order to do so, they will

Provision for contingencies, After determining the amount of working capita... After determining the amount of working capital as in above, a specific amount say 5 percent or 10 percent may be added to cover contingencies. This is to be noted that facts depen

Qt, x+2y+3z=6 2x+4y+z=7 3x+2y+9z=14 x+2y+3z=6 2x+4y+z=7 3x+2y+9z=14

Production, Production As you would suspect, effectively directing an o... Production As you would suspect, effectively directing an organization needs prudent management of production. Because this is a hands-on process, and often entails dealing wit