Activity Based Costing

Activity based costing ABC, is an alternative approach to the traditional method of allocating overhead costs to products.

Traditional costing allocates overhead to a product using an arbitrary method such as for example, direct labor hours.

Activity based costing first analyzes the overhead into activities and then allocates the overhead to the product based on how much of that activity the product used.

Last modified November 6th, 2016 by Team
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