What is ABC Costing?
ABC Costing is a methodology for calculating the costs of products and services, which allows obtaining the real costs of the products or services that the organization offers.
ABC Costing allows obtaining innumerable benefits, both operational and strategic, supports costs reduction programs, profitability analysis in order to optimize the use of resources.
How does the ABC Costing System works?
ABC Costing provide greater precision, since the calculation of costs is done in two steps:
In a first step, the costs and expenses incurred in the organization are assigned to the different activities, according to the real consumption of the costs and expenses mentioned by each particular activity.
In a second step, the costs that were calculated for the activities are assigned to the products or services based on how much activity is required by product or service.
In this way, this methodology gives greater precision to the costing of products or services. The costs assignments are “specific” and in the “correct amount” to the activity, process, product or service.
ABC Costing can be implemented in all types of industry. We have developed ABC Costing Templates in Excel to create small to medium size models, and also we have Specialized Software for medium to large or corporate projects. Selection depends on the needs, size of the Project, Expected Functionalities and Budget. Contact us!
Performing ABC Costing requires the preparation of a Conceptual Costing Model. The model establishes the size of the organization’s project, and according to the size of the project and future vision, the tool for calculating ABC Costs is chosen.
Small to medium Costing Models can be done in Excel. Ask about our ABC Costing templates.
Medium to large Costing Models require Specialized Software for ABC Costing.