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How does activity based costing relate to the objectives of a company?



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Activity Based Costing does the calculation of costs, that can be segregated as Product, Service, Business Sustaining and Available to Use Costs. Mere calculation of those costs practically would not help anybody. Once has to go beyond those calculations and anlyse those costs. After analyzing (which can be performed in various ways) find out the action poins and work on them. Activity Based Costing is a concepts that can be used to support for various objective of the company. These objectives can be grouped in three parts a) Product and Customer Profitability b) Process and cost improvements c) Resource planning.