ACTIVITY BASED COST FROM THE PERSPECTIVE OF COMPETITIVE ADVANTAGE

Activity-Based Costing (ABC) is a methodology that measures the cost and performance of activities, resources, and cost objects such as products and services to provide more accurate cost information for managerial decision making. ABC represents an alternative paradigm to traditional cost accounting system and it often provides more accurate cost information for decision making such as product pricing, product mix, and make-orbuy decisions. ABC models the causal relationships between products and the resources used in their production and traces the cost of products according to the activities through the use of appropriate cost drivers.