MBA520 Performance Measurement and Accounting Systems____________________________
Week 5 –5.9 Activity-Based Management (ABM)
(The following are excerpts from: Introduction to Management Accounting, by Horngreen/Sundem/Stratton, Pearson Prentice Hall, 2005, 13th edition)
Activity-based management (ABM)is a management tool that involves analyzing and costing activities with the goal of improving efficiency and effectiveness.
As you would expect ABM is closely to ABC, but the two schemes differ in their primary goals. Whereas ABC focuses on activities with the goal of measuring the costs of products and services produced by them, ABM focuses on activities with the goal of managing the activities themselves.
This difference is shown graphically in Illustration 6-12 below.
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