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Activity Based Cost Management (ABCM)

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WHAT IS ACTIVITY BASED COST MANAGEMENT?

Activity-based costing (ABC) is a costing method that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each. Therefore, this model assigns more indirect costs (overhead) into direct costs compared to conventional costing.

HOW IS ABCM USEFUL? (Outcomes of ABCM)
  • Precision in cost allocation across departments
  • Profitability insights for products, customers, and regions
  • Accurate transaction cost calculations
  • Core vs. non-core activity identification
  • Strategic decision-making improvement
  • Conflict resolution across departments
  • HR benefits—optimized KRAs, KPIs, and resource allocation
  • Continuous improvement and cost optimization

Methodology:
  • Financial trial balance preparation
  • Business process and cost driver identification
  • Meetings with departmental heads for deeper insights
  • Resource time and expense allocation
  • Targeted action plans for cost reduction

Assignment Duration:

For mid-sized companies with 10 departments, our typical assignments span 4-6 weeks. Our dedicated team of 2-3 consultants ensures efficient delivery. Expect tangible results including noticeable cost reduction and improved asset utilization.

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