Activity-Based Costing

Enhancing company performance through meaningful process costs

Without looking at processes when carrying out cost accounting you cannot answer some of the fundamental questions which impact upon corporate management control!

Activity-based costing (ABC) is a management approach which can be fully integrated into the cost accounting systems of companies and organizations. It was developed in 1989 by Prof. Péter Horváth and Dr. Reinhold Mayer and rapidly spread throughout the German-speaking world. In service providers ABC a general method used to calculate the costs of products and services based on processes and to create transparency for costs and processes.

We use activity-based costing to create an output-based view of cost structures. In this way we can see which costs are incurred by specific activities and processes. At the same time, we can also identify the main cost drivers for processes.

Since its foundation in 1981, Horváth & Partners has carried out countless projects aimed at analyzing process costs, including ones at major companies such as Lufthansa, Citibank or BASF. Activity-based costing can be applied to a broad range of fields, including:

• Process transparency.
• Optimization of overheads.
• Process-based product cost calculation and earnings statement.
• Internal cost allocation and center management.
• Business process optimization and restructuring.
• Capacity management.
• Benchmarking.

Should you wish to learn more about this fascinating topic, please don’t hesitate to contact us!