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ACTIVITY-BASED COSTING

What is this practice and how effective is it?

Activity-based costing (ABC) models enable managers to understand product and customer net profitability by providing better methods of attributing overheads. But few challenge the need for these costs in the first place, many of which are caused by the controlling bureaucracy. More-enlightened managers use ABC to see whether costs should be incurred at all, but its implementation can be complicated and expensive. We will examine these issues and look at the latest incarnation of ABC, which offers far better opportunities for success.

Alternative names and related topics: activity-based management; customer profitability analysis; product-line profitability

Peter Drucker ...

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