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Activity-Based Costing - Activity-Based Costing(ABC A...

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Activity-Based Costing (ABC): A Profitable Tool in Decision Making By: Carrie Bowen Dr. Duane Smith Adv. Managerial Accounting Acc 304 November 2 nd , 2010 Activity-Based Costing:
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Carrie Bowen 2 A Profitable Tool in Decision Making An activity-based costing system (ABC) is a nontraditional costing method designed to provide managers with needed information for strategic decision making. The costing method provides detailed information on manufacturing and nonmanufacturing costs versus tradition costing methods which only take into account manufacturing product costs. The ABC method commonly is used for internal decision making and a more traditional costing method is used for external financial reports. For reference to the step-by-step process of Activity-Based costing systems, please refer to the attached example taken from the Garrison, Noreen, and Brewer Advanced Managerial Accounting text. Also attached to the text is a brief glossary of terms commonly used in Activity-Based Costing systems.
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