Mediaspace scheduled maintenance: Aug 25, 2026 07:00 - 12:00 AM. During this time, videos will be temporarily unavailable. Check status updates.

Lecture

Activity-Based Costing

In course

MGT-510: Performance Management

The objective of the course is to provide participants with the main processes and tools a company applies to evaluate the financial and non financial performance. ...

Description

This lecture covers the implementation of Activity-Based Costing (ABC) in management control. It explains how to identify cost drivers, allocate overhead costs, and determine unit costs using ABC. The lecture also compares traditional costing methods with ABC, highlighting the benefits and challenges of each approach.

This video is available exclusively on Mediaspace for a restricted audience. Please log in to MediaSpace to access it if you have the necessary permissions.

Watch on Mediaspace

Official source

Related concepts (32)

Activity-based costing

Activity-based costing (ABC) is a costing method that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each. Therefore, this model assigns more indirect costs (overhead) into direct costs compared to conventional costing. CIMA, the Chartered Institute of Management Accountants, defines ABC as an approach to the costing and monitoring of activities which involves tracing resource consumption and costing final outputs.

Cost accounting

Cost accounting is defined by the Institute of Management Accountants as "a systematic set of procedures for recording and reporting measurements of the cost of manufacturing goods and performing services in the aggregate and in detail. It includes methods for recognizing, classifying, allocating, aggregating and reporting such costs and comparing them with standard costs". Often considered a subset of managerial accounting, its end goal is to advise the management on how to optimize business practices and processes based on cost efficiency and capability.

Cost

In production, research, retail, and accounting, a cost is the value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it is counted as cost. In this case, money is the input that is gone in order to acquire the thing. This acquisition cost may be the sum of the cost of production as incurred by the original producer, and further costs of transaction as incurred by the acquirer over and above the price paid to the producer.

Variable cost

Variable costs are costs that change as the quantity of the good or service that a business produces changes. Variable costs are the sum of marginal costs over all units produced. They can also be considered normal costs. Fixed costs and variable costs make up the two components of total cost. Direct costs are costs that can easily be associated with a particular cost object. However, not all variable costs are direct costs. For example, variable manufacturing overhead costs are variable costs that are indirect costs, not direct costs.

Fixed cost

In accounting and economics, 'fixed costs', also known as indirect costs or overhead costs, are business expenses that are not dependent on the level of goods or services produced by the business. They tend to be recurring, such as interest or rents being paid per month. These costs also tend to be capital costs. This is in contrast to variable costs, which are volume-related (and are paid per quantity produced) and unknown at the beginning of the accounting year. Fixed costs have an effect on the nature of certain variable costs.

Related lectures (38)

Sources of Capital & Financial Modelling

Covers the importance of financial data for startups and sources of capital.

Hydraulic Economy: Economic Evaluation

Explores economic evaluation in hydraulic economy, focusing on cost-benefit methods, opportunity costs, and differential analysis in engineering.

Project Management: Portfolio Management Log in to Mediaspace to watch this video

Focuses on project planning, execution, and key user involvement for effective project management.

Project Management Essentials: Scope, Time, and Cost Log in to Mediaspace to watch this video

Covers essential project management aspects like scope, time, and cost, along with resource allocation, schedule optimization, and risk management.

Market-Based Instruments: Emission Reduction Strategies Log in to Mediaspace to watch this video