Glossary · A
ABC
Activity-Based Costing
Activity-based cost accounting
What it means
A costing method that assigns resource costs to activities, then allocates those costs to products, services or customers according to their use of each activity. It helps explain the work behind a cost, rather than relying only on departmental totals.
What it means for a business
A process review can use ABC to estimate the cost of handling an order, checking an invoice or resolving a complaint. Time spent re-entering data becomes visible as part of the activity cost and can be compared with the cost of changing the process.
In practice
Explore Q-Journey and the AiP audit