Activity – Based Management
The demand for more accurate and relevant management accounting information has led to the development of activity – based management.
Activity – based management is a systemwide, integrated approach that focuses management ‘ s attention on activities with the objective of improving customer value and the resulting profit.
Activity – based management emphasizes activity – based costing (ABC) and processvalue analysis.
Activity – based costing improves the accuracy of assigning costs by first tracing costs to activities and then to products or customers that consume these activities.
Process value analysis emphasizes activity analysis – trying to determine why activities are performed and how well they are performed.
The objective is to find ways to perform necessary activities more efficiently and to eliminate those that do not create customer valus.