Activity Based Cost Accounting

Activity-Based Cost Accounting (ABCA) is a method for measuring the costs of specific activities within an organization. Instead of just assigning costs based on general categories, ABCA identifies what causes costs, breaking them down by activities that drive expenses—such as production, marketing, or customer service. This approach helps businesses understand where they are spending resources and enables more precise pricing, budgeting, and decision-making. By focusing on the activities that add value, companies can improve efficiency and profitability.