Activity-Based Management - ABM


DEFINITION of 'Activity-Based Management - ABM'

A procedure that originated in the 1980s for analyzing the processes of a business to identify strengths and weaknesses. Specifically, activity-based management seeks out areas where a business is losing money so that those activities can be eliminated or improved to increase profitability. ABM analyzes the costs of employees, equipment, facilities, distribution, overhead and other factors in a business to determine and allocate activity costs.

BREAKING DOWN 'Activity-Based Management - ABM'

Activity-based management can be applied to different types of companies, including manufacturers, service providers, non-profits, schools and government agencies, and ABM can provide cost information about any area of operations in a business. In addition to improving profitability, the results of an ABM analysis can help a company produce more accurate budgets and financial forecasts.

  1. Purchasing System

    A method used by businesses to buy products and/or services. ...
  2. Activity Capacity

    The degree to which a particular action is expected to perform. ...
  3. Activity Cost Driver

    A factor that influences or contributes to the expense of certain ...
  4. Activity Center

    A pool of activity costs associated with particular processes ...
  5. Accounting

    The systematic and comprehensive recording of financial transactions ...
  6. Activity-Based Budgeting - ABB

    A method of budgeting in which the activities that incur costs ...
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