Answer to Question #180061 in Accounting for Donsai

Question

Explain the concept of Activity Based Management and how it can shape continuous improvement in organisation.                    

 

Answer 1

Activity Based Management is a means of analyzing a company's profitability by looking at each aspect of its business to determine strengths and weaknesses. Activity Based Management aims to achieve continous improvement by making activity analysis that is by classifying each activity as value-added or non-value added. Non-value added activities merely add to costs which can be eliminated without reducing product quality, performance or value.