Activity-based costing
The Chartered Institute of Procurement & Supply (CIPS) Glossary of procurement terms, defines activity-based costing (ABC) as: ‘An accounting method in which indirect costs are assigned to activities used in the production of a product or delivery of a service. These activities are then used to apportion those costs to products and services in a way that gives a clearer understanding of the total cost of a product or service.’
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