Definition : ABC method

The ABC method, also known as the Activity-Based Costing method, is a management accounting technique that assigns costs to products or services based on the activities involved in producing them. This method takes into account the various activities and resources required to produce a product or service, rather than simply allocating costs based on a single cost driver. By providing a more accurate and detailed understanding of costs, the ABC method helps businesses make informed decisions about pricing, resource allocation, and process improvement. It is often used in industries with complex and diverse production processes, such as manufacturing, healthcare, and service industries.

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