Activity Based Costing (ABC) adds the most value to an organization when it is used as the informational basis of managing and improving the business. Activity analysis leads to an Activity Based Management (ABM) business model from which management can make decisions to improve the effectiveness of the organization. These improvements can take the form of incremental process improvement using Total Quality, Just-in-Time or Reengineering. Once these changes are made, the ABM model provides mechanisms to measure the relative success of the changes implemented and make business decisions leading to further analysis and improvement.
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