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Activity based Costing is a system that allocates overhead to multiple activity cost pools and assigns the
activity cost pools to products or services by means of cost drivers. On the other hand, Activity Based
Management would generally refer to an extension of Activity based Costing from product costing to a
comprehensive management tool that focuses on reducing costs and improving processes and decision
making.
i. Evaluate the differences between Activity Based Costing and the traditional costing method in today's
organization.
ii. Discuss with examples, the steps that need to be taken when using the Activity Based
Costing in the service industry.
iii. Conclude your report by making the necessary inferences and suggest the future
implications based on your findings.
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