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Unformatted text preview: VALUE-ADDED VERSUS NON–VALUE-ADDED ACTIVITIES Some companies that have experienced the benefits of activity-based costing have applied it to a broader range of management activities. Activity-based management (ABM) extends the use of ABC from product costing to a comprehensive management tool that focuses on reducing costs and improving processes and decision making. A refinement of activity-based costing used in ABM is the classification of activities as either value-added or non–value-added. Value-added activities increase the worth of a product or service to customers. Such activities involve resource usage and related costs that customers are willing to pay for. Value-added activities are the activities of actually manufacturing a product or performing a service. Examples of value- added activities in a manufacturing operation are engineering design, machining, assembly, painting,...
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This note was uploaded on 11/08/2011 for the course ACCOUNTING ac 202 taught by Professor - during the Fall '11 term at Montgomery.
- Fall '11