Cost to Sell + Support:
Activity-Based Costing

Activity-Based Costing (ABC) helps both manufacturing and services companies assign overhead costs in a meaningful way. Cost drivers are defined and used to assign resource costs to products or services via the activities that consume those resources. By engaging in a process that allocates costs based on the events that generate them, you can get more accurate and specific costs answers to guide and improve decisions across the organization.

The data set required to effectively implement an ABC program is enormous, so the key to any successful implementation requires a platform that scales to handle large volumes, accommodates changes to business requirements, traces and analyzes root causes, and provides access to multiple users. ImpactECS models assign overhead costs to products or customers for an unlimited number of activities, using the most appropriate cost drivers. The detailed analysis available with the ImpactECS platform helps your team answer strategic questions like, “Which customers or products are profitable?” and “What activities are driving costs?”

ImpactECS Enables Robust Activity-Based Costing Processes

  • Calculate end-to-end costs: Build traditional, time-driven, or hybrid ABC models to assign both direct and indirect costs via activities for each product or service you provide
  • Allocate overhead spending: Assign meaningful drivers and pool general ledger or forecasted spending to dynamically calculate allocation rates
  • Reduce activity costs: Identify underperforming or expensive activities at the unit, batch, product, customer, market, or entity level
  • Analyze product margins: Pinpoint unprofitable products or categories to educate stakeholders in product development, operations, sales, and leadership – and inform decisions on product availability
  • Improve strategic decisions: Employ ABC to gain insights on pricing decisions, outsourcing, production facility costs, distribution channel costs, customer, and product profitability, and to benchmark activity cost performance

Learn more about the four problems with using spreadsheets for analytics.

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