Activity-Based Costing (ABC) and Management

Financial Management and Accounting October 25, 2025
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Introduction

This comprehensive course provides detailed knowledge of Activity-Based Costing (ABC) methodology and its application to management decision-making. Participants will learn to design, implement, and use ABC systems to accurately assign costs to products, services, and customers based on their consumption of activities. The program covers the complete ABC implementation process from activity analysis through cost driver selection and system maintenance. Through hands-on exercises and case studies, attendees will develop the expertise to use ABC information for improved pricing, product mix, and process improvement decisions.

Objectives

Key learning objectives for this course include:

  • Understand the principles and benefits of Activity-Based Costing
  • Design and implement ABC systems in various organizational contexts
  • Identify and analyze activities and cost drivers
  • Assign costs to cost objects using ABC methodology
  • Use ABC information for product and customer profitability analysis
  • Implement Activity-Based Management for process improvement
  • Apply time-driven ABC for simplified implementation
  • Integrate ABC with other management systems
  • Manage ABC system maintenance and updates

Target Audience

  • Cost Accountants
  • Management Accountants
  • Financial Analysts
  • Operations Managers
  • Process Improvement Specialists
  • Product Managers
  • Pricing Analysts
  • Business Process Owners

Methodology

  • ABC system design workshops
  • Activity analysis exercises
  • Cost assignment calculations
  • Profitability analysis case studies
  • Process improvement simulations
  • Software demonstration sessions
  • Individual ABC implementation projects

Personal Impact

  • Enhanced costing system design skills
  • Improved activity analysis capabilities
  • Stronger analytical and problem-solving abilities
  • Increased confidence in cost management
  • Better understanding of process costs
  • Professional growth in management accounting

Organizational Impact

  • Improved product and customer profitability measurement
  • Enhanced pricing and product mix decisions
  • Better identification of process improvement opportunities
  • More accurate cost information for decision-making
  • Increased cost transparency and accountability
  • Improved resource allocation and efficiency

Course Outline

ABC Fundamentals

Basic Concepts
  • Traditional costing limitations
  • ABC principles and philosophy
  • Cost hierarchy concepts
  • Benefits and challenges of ABC
Implementation Framework
  • ABC implementation roadmap
  • Resource planning for ABC
  • Stakeholder engagement strategies
  • Pilot project selection

Activity Analysis

Activity Identification
  • Activity dictionary development
  • Process mapping for activity analysis
  • Interview techniques for activity data
  • Activity consolidation and categorization
Cost Assignment
  • Resource cost assignment to activities
  • Activity cost pool development
  • Cost driver identification and selection
  • Driver quantity measurement

Cost Object Analysis

Product Costing
  • Activity cost assignment to products
  • Service line costing using ABC
  • Batch-level and product-level costs
  • Facility-sustaining cost allocation
Customer Costing
  • Customer-related activity analysis
  • Customer cost-to-serve calculation
  • Channel and distribution costing
  • Customer profitability reporting

Advanced ABC Techniques

Time-Driven ABC
  • Time-driven ABC concepts
  • Capacity cost rate calculation
  • Time equation development
  • Practical capacity estimation
    • ABC Variations
    • Resource consumption accounting
    • German cost accounting approaches
    • Japanese cost management systems
    • Hybrid costing systems

    Activity-Based Management

    ABM Applications
    • Process improvement using ABC data
    • Activity analysis for waste reduction
    • Benchmarking and performance improvement
    • Value-added vs. non-value-added analysis
    Decision Support
    • Pricing decisions using ABC
    • Product mix and design decisions
    • Sourcing and make-buy decisions
    • Capacity management decisions

    Implementation and Sustainability

    System Implementation
    • ABC software selection and implementation
    • Data collection and validation processes
    • System testing and validation
    • User training and support
    Ongoing Management
    • ABC system maintenance
    • Periodic review and update processes
    • Integrating ABC with budgeting
    • ABC for performance measurement

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