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Companies that produce a variety of products need a costing system that allocates costs based on the varying resource demands of each product. Activity-based
Companies that produce a variety of products need a costing system that allocates costs based on the varying resource demands of each product. Activity-based costing systems identify activities as the cost objects. An activity- based system (ABC) identifies activities as fundamental cost objects. Costs are then assigned to the activities and allocated to the individual products. Unlike simple systems, ABC systems calculate costs of individual activities to cost products. Based on your observation of videos, text readings, lectures, and reflection of your experiences, what is activity-based management and how can it be used to improve the profitability of a company. In this discussion, be sure to compare and contrast your understanding of activity-based costing with your classmates. Identify a simple product and explain the different cost drivers used in making that product.
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