Activity-based costing

Activity-based costing (also known by its acronym, ABC) is those accounting procedures that can quantify the true profitability of different activities by identifying their actual costs.

Definition

According to Marketing Management by Keller and Kotler (15th edition),

Activity-based costing (ABC). Accounting procedures that can quantify the true profitability of different activities by identifying their actual costs.

According to Cost Accounting by Horngren, Datar, Rajan (14th edition),

Activity-based costing (ABC). Approach to costing that focuses on individual activities as the fundamental cost objects. It uses the costs of these activities as the basis for assigning costs to other cost objects such as products or services.

According to Managerial Accounting by Braun, Tietz (5th edition),

• Activity-based costing (ABC). Focusing on activities as the fundamental cost objects. The costs of those activities become building blocks for compiling the indirect costs of products, services, and customers.