What is ABC/M ?

Activity-Based Costing/Management or ABC/M is a powerful methodology developed in the 80’s and recognized as a practical tool to solve many of the problems associated with the traditional costing systems, including:

• Difficulty in assigning the indirect costs correctly to products, services, customers and channels; and the consequent inability to identify practical ways to truly increase your profitability
• Impossibility of obtaining the costs of processes, which is indispensable to the decision making process and for the operational efficiency improvement 
• Lack of a clear view on the cause and effect relationships among customers / channels /products / services, as well as on the activities developed and demanded resources, essential to produce "what-if" businesses scenarios analysis that could be used to identify actions that maximize the shareholders' value.

ABC/M provides the organization a clear picture on how processes can be improved and how is it possible to optimize the profitability focusing in the activities that truly produce costs:

• Identifying costs based on the Resources they consume
• Assigning the cost of the Activities to Products, Customers or Market Segments based on the demands of the production processes or services provided
• Identifying the causes of costs.
  

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	Business game approach for understanding Business Intelligence solutions		9 June 2011 - IBM Finance Forum		IBM - 100 years