Activity based costing leads to strategic decision making

Abstract

The main objective of this paper is to show the insufficiency of traditional costing systems and to offer a solution, which is Activity Based Costing (ABC) in pricing and strategic decision making processes. The differences in situations before and after implementing ABC and benefits from using ABC have been shown by using an implementation example. In the first part of this article background information, necessity and advantages of ABC are explained. In the second part, the implementation of Activity Based Costing is shown through a case study.