Definition of 'Activity-Based Costing - ABC'
An accounting method, that identifies the activities that a organization performs, & then assigns indirect costs to products; An activity based costing (ABC) system recognizes the relationship between costs, activities & products, & through this relationship assigns indirect costs to products less arbitrarily than traditional methods;
Expertsmind.com explains 'Activity-Based Costing - ABC'
Some costs are difficult to assign through this method of cost accounting; Indirect costs, such as management & office staff salaries are sometimes difficult to assign to a particular product produced; For this reason’ this method has found its niche in the manufacturing sector.;
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