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5. ABC method
The ABC method (for "Activity Based Costing") is inspired by the work of American authors (Johnson and Kaplan) and is presented as an alternative to the traditional basic method.
5.1 Principles
Proponents of the ABC method criticize the traditional method of allocating costs by responsibility center for taking an overly hierarchical, vertical view of the company, whereas the most important thing is to start from a sound process model. To do this, we need to adopt a more "horizontal" approach to activities, and define "cost drivers" that are not necessarily linked to production volume, but to more strategic aspects. Thus, the choice of the direct labor hour or the machine hour as the main labor units used as a basis for allocating indirect costs is stygmatized....
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ABC method
Partial cost approach
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