Introduction to Accounting Fundamentals of Management Accounting: Lesson 4 Activity Based Costing

Activity-based costing (ABC) is an accounting method that assigns costs to products and services based on the activities they require. This approach helps organizations more accurately determine the cost of individual products and services, enabling them to identify and eliminate inefficiencies, improve pricing decisions, and better allocate resources.

Learning Oucomes:

Introduction to ABC:
Identifying Activities
Assigning Costs to Activities
Cost Pools
Cost Drivers
Calculating the Cost of Products/Services
Advantages and benefits of ABC
Challenges
Activity-based costing is a detailed approach that assigns costs to products and services based on the activities they require, offering more accurate and actionable cost information compared to traditional costing methods.