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Chapter 1

Activity-based costing and activity-based

management

Outcome

By the end of this session you should be able to:

 use ABC to derive 'long-run' costs appropriate for use in decision making.

 explain activity-based management and its uses in improving the efficiency of
repetitive overhead activities.

 use direct and activity-based cost methods in tracing costs to 'cost objects' such
as customers or distribution channels.

 compare these costs with appropriate revenues to establish 'tiered' contribution
levels, as in the activity-based cost hierarchy.

 use direct customer profitability and distribution channel profitability

and answer questions relating to these areas.

The underpinning detail for this Chapter in your Integrated Workbook can
be found in Chapter 1 of your Study Text

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