This, in turn, means that firms must cost-efficient of producing high- ays variety, low-volume products. To find ways to improve performance, firms operating in kind of environment not only must know what it currently costs to do things, but they must also evaluate why and how they do things. Improving performance translates into constantly searching for ways to eliminate waste a process known as continuous improvement. Activity based costing and activity-based management are important tools in this ongoing improvement effort.