ECON 10B Chapter Notes - Chapter 23: Management System
Document Summary
Activity based management: focuses on the primary activities that business performs, determines the costs of the activities, and then uses the cost information to make decisions that will lead to an imporved customer satisfaction and greater pro ts. Activity-based costing: focuses on the costs of activities as building blocks for allocating indirect costs to products and services. Activity based costs are more accurate because abc considers the resources (activities) each product actually uses. Many companies adopt abc to get more accurate product costs for pricing and product mixing decisions. Value engineering: reevaluating activities to reduce costs while satisfying customer needs. Target prices: what customers are willing to pay for the product or service. Full product cost: the cost to develop, produce, and deliver the product or service. Target cost: the maximum cost to develop, produce, and deliver the product or service and earn the desired pro t.
