If you want to know how your costs are structured and what opportunities exist for cost reduction, then Activity Based Costing (ABC) is the answer.
ABC allows you to understand your costs at an activity level and see a breakdown by type of expense for each activity (work phase or task). This breakdown is by a “production unit”, often referred to as a “cost center” (job or project). Hence, ABC is a three dimensional breakdown of costs by cost center, activity and account. This provides a level of detail that allows meaningful cost control decisions to be made.
Why is Payroll important as a source of ABC data?
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