activity based costing

It is frequently the case that a business model which allocates indirect costs on the arbitrary basis of absorption methods can give unpredictable and often counter-intuitive results. This often results in some products or customers being subsidised at the expense of others. It could well be that certain products or customers groups are actually costing you money.

Activity Based Costing (ABC) is a tried and tested technique developed in the 1970's and 80's that looks where costs are incurred and attributes them directly to some given process. Our consultants have been using ABC methods for many years in sectors ranging from heavy manufacturing to banking and service industries. ABC allows you to improve the bottom line by identifying unprofitable products and customers.

In recent years iC has seen a rise in the numbers of banks and other service sectors which have adopted the ABC to attribute all aspects of business expenses to products and customers thus improving overall profitability.