How do you use ABC to identify and eliminate non-value-added activities?
Activity-based costing (ABC) is a method of allocating overhead costs to products or services based on the activities they consume. ABC can help you improve your profitability and competitiveness by identifying and eliminating non-value-added activities. Non-value-added activities are those that do not contribute to customer satisfaction or product quality, and that could be reduced or eliminated without affecting the output. Here are some steps you can follow to use ABC to identify and eliminate non-value-added activities.