Value added costs are what it costs your business to

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Value-added costs are what it costs your business to produce your products or provide your services. Manufacturing firms : raw materials, direct labor, equipment and machinery expenses used in creating your products. Retail Firms : costs of purchasing your merchandise, transporting the merchandise and storing merchandise.
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Activity-Based Management Non value-added costs are costs that can be eliminated without affecting a product’s value to the customer. Non-value-added costs often have a negative return in that they increase your costs without adding value. Examples: Reworking defective products, product inspections and quality control. Overproduction leads to higher storage costs Transporting partly finished products from one part of the plant to another
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Activity-Based Management Benchmarking : The continuous process of comparing products, services and activities against the best industry standards It is a tool to help an organization measure its competitive position Benchmarks can come from competing organization or organisations having similar process
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Benefits of Activity-Based Costing and Management Systems Companies adopt ABC systems to: set an optimal product mix estimate profit margins of new products determine consumption of shared resources keep pace with new product techniques
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Benefits of Activity-Based Costing and Management Systems keep pace with technological changes costs associated with bad decisions resulting from inaccurate cost estimates take advantage of reduced cost of ABC Systems due to computer technology ERP systems Companies adopt ABC systems to:
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