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)
“In our large cities, the population is godless, materialized,—no bond, no fellow-feeling, no enthusiasm. These are not men, but hungers, thirsts, fevers, and appetites walking. How is it people manage to live on,—so aimless as they are? After their peppercorn aims are gained, it seems as if the lime in their bones alone held them together, and not any worthy purpose.”
—Ralph Waldo Emerson (1803–1882)
“...that absolutely everything beloved and cherished of the bourgeoisie, the conservative, the cowardly, and the impotent—the State, family life, secular art and science—was consciously or unconsciously hostile to the religious idea, to the Church, whose innate tendency and permanent aim was the dissolution of all existing worldly orders, and the reconstitution of society after the model of the ideal, the communistic City of God.”
—Thomas Mann (1875–1955)