Using the cost dimension of ABC to help manage cost

Increase Non-Value added activity

not doing things right

doing the right things

doing things right

costing

redirect and improve the use of resources

measure cost performance activity

Identify the activities that the organization performs

Calculate the cost of each activity

Identify the activity cost driver for each activity

all of the above

i only

i & ii

iii & ii

i & iv

identify activities with low impact and does not eliminate unnecessary.

helps organization in provide more accurate information thus resulting more accurate pricing

Offers better understanding and justification of costs in manufacturing overhead

Requires Substantial resources

Lack of support of higher level management

Impossible to allocate overhead costs to specific activity

Cost assignment view , Cost driver and resources

Cost drivers , activities and cost objects

Cost drivers , Resources and process view

Cost drivers, Activities and Performance measures

to make decision for your life

to maximize profit and minimize losses

to make decisions including pricing , product design decision and priorities improvement effort

to provide support in the decision making

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