Aims of Model
With ABC, an organization can soundly estimate the cost elements of entire products and services. That may help inform a company's decision to either:
- Identify and eliminate those products and services that are unprofitable and lower the prices of those that are overpriced (product and service portfolio aim)
- Or identify and eliminate production or service processes that are ineffective and allocate processing concepts that lead to the very same product at a better yield (process re-engineering aim).
In a business organization, the ABC methodology assigns an organization's resource costs through activities to the products and services provided to its customers. ABC is generally used as a tool for understanding product and customer cost and profitability based on the production or performing processes. As such, ABC has predominantly been used to support strategic decisions such as pricing, outsourcing, identification and measurement of process improvement initiatives.
Read more about this topic: Activity-based Costing
Famous quotes containing the words aims of, aims and/or model:
“Man lives consciously for himself, but is an unconscious instrument in the attainment of the historic, universal, aims of humanity.”
—Leo Tolstoy (1829–1910)
“We are often reminded that if there were bestowed on us the wealth of Crsus, our aims must still be the same, and our means essentially the same.”
—Henry David Thoreau (1817–1862)
“When Titian was mixing brown madder,
His model was posed up a ladder.
Said Titian, “That position
Calls for coition,”
So he lept up the ladder and had her.”
—Anonymous.