Abiblo Finance – Activity Based Costing
Activity Based Costing is also known as ABC method. The ABC method is a system of costing proposed by Professors Johnson and Kaplan where they questioned the absorption costing technique.
ABC method recognizes that the costs are incurred by each activity which takes place within an organization and the customers / products should bear the costs according the activity they use.
The ABC method provides accurate cause and effect allocations of costs that cannot be obtained from traditional costing system.