DESCRIPTIONThis is an enhanced edition of the HBR article 91305, originally published in May/June 1991. HBR OnPoint Articles save you time by enhancing an original Harvard Business Review article with an overview that draws out the main points and an annotated bibliography that points you to related resources. This enables you to scan, absorb and share the management insights with others.
Activity-based cost management (ABC) can help managers find the places in their organizations where improvement is likely to have the greatest financial payoff. To best utilize ABC, managers must separate whatever expenses are required to produce individual products from those required to process batches, to maintain a product, or to keep a manufacturing facility up and running.