ACTG 2020 Chapter Notes - Chapter 7: Resource Consumption, Activity-Based Costing, European Cooperation In Science And Technology
Document Summary
Abm can be used for cost reduction. Focuses on cost reduction instead of cost assignment. Emphasizes the maximization of system wide performance through: For example, an analysis may reveal that the root cause of the cost of moving materials is plant layout. Once the root cause is known, action can be taken to improve the activity. Basically identifying which activities provide value and which do not. Is the process of identifying, describing, and evaluating the activities the organization performs. Step 4 is concerned with cost reduction rather than cost assignment. Value-added activity activities that increase the value to a customer of a product/service and is one for which the customer is willing to pay. Non-value added (nva) activities that increase the time spend on a product/service and do not add value to the customer. Activities that are necessary to remain in business. Activities other than those that are absolutely essential to remain in business are called non-value-added activities.
