July 15, 2016 7:00:00 AM EDT  |  Finance

Activity-Based Costing (ABC) Identifies Business Improvement Opportunities

Markon is helping customers improve their businesses through activity-based costing (ABC). ABC is an extended cost allocation methodology that identifies activities associated with a product or service (offerings) and assigns indirect costs to those offerings based on the use of the activity.

Cost Management - Business Concept. Green Arrow with "Cost Management" Slogan on a Grey Background. 3D Render.By focusing on the activity that drives the cost, ABC attempts to accurately trace the use of resources going into individual products.

The overall idea of ABC is that management does not manage the costs, but rather they manage the associated activities; and it is through this management of activities that opportunities for improvement are identified.

Some of these improvements include:

  • A reduction or standardization of offerings by a department
  • The identification of excess enterprise enabling activities
  • Increase transparency in pricing and financial management
  • Better strategic decision making


About the Author

David Morrison

David Morrison

Dave leads Markon’s financial management practice and is also the market lead for our Intelligence Community finance and consulting business. He has provided project management, financial consulting, and IT services to clients across the Intelligence Community. Dave began his career as a Contracting Specialist managing an IDIQ contract consisting of 50+ separate delivery orders valued at more than $100 million. In 2013, he was named Markon's Employee of the Year. Dave earned his MBA from Georgetown University and a BS in Finance with minors in Economics and Management Information Systems from the University of Delaware.