• Dr. Heena Tabasum
• Mr. Somashekhar T H

Attention has been fast given to Activity-Based Costing in today's business since it can provide more accurate cost information than the indigenous techniques. Traditional costing usually fails to capture most of the modern business processes accurately, relying on volume-based simplistic drivers that result in less accurate cost allocations. The purpose of this article is to present a detailed guide on how to understand, implement, and use ABC to enhance efficiency and profitability. First, it defines ABC as a technique that identifies and assigns overhead costs to activities and then traces the accumulation of the activities to the product or services consumed. ABC brings forth accurate costing, hence an improved decision-making capability, an enhanced profitability through the identification of unprofitable products or services, and waste reduction by identifying activities that consume a lot of resources. The steps for implementation involve the identification of activities, assigning costs to them with relevant drivers, accumulating costs to various cost objects, and analyzing the results so as to drive informed decisions. Practical applications in manufacturing, service industries and healthcare, prove its utility in determining true costs, process optimization, and improvement in service delivery. Challenges to be addressed including complexity, data requirements, and resistance to change, together with real case examples of successful ABC implementations and the results attained. ABC positions itself in essentially strategic tools of efficiency and precision for business. Thus, its adoption would contribute to gaining a competitive advantage amidst the dynamism in the current business environment. Attention has been fast given to Activity-Based Costing in today's business since it can provide more accurate cost information than the indigenous techniques. Traditional costing usually fails to capture most of the modern business processes accurately, relying on volume-based simplistic drivers that result in less accurate cost allocations. The purpose of this article is to present a detailed guide on how to understand, implement, and use ABC to enhance efficiency and profitability. First, it defines ABC as a technique that identifies and assigns overhead costs to activities and then traces the accumulation of the activities to the product or services consumed. ABC brings forth accurate costing, hence an improved decision-making capability, an enhanced profitability through the identification of unprofitable products or services, and waste reduction by identifying activities that consume a lot of resources. The steps for implementation involve the identification of activities, assigning costs to them with relevant drivers, accumulating costs to various cost objects, and analyzing the results so as to drive informed decisions. Practical applications in manufacturing, service industries and healthcare, prove its utility in determining true costs, process optimization, and improvement in service delivery. Challenges to be addressed including complexity, data requirements, and resistance to change, together with real case examples of successful ABC implementations and the results attained. ABC positions itself in essentially strategic tools of efficiency and precision for business. Thus, its adoption would contribute to gaining a competitive advantage amidst the dynamism in the current business environment.

Key Words: Activity Based Costing, Activities, Cost Drivers, Traditional Costing, etc.

"Driving Efficiency and Precision: Implementing Activity Based Costing in Modern Business", International Journal of Emerging Technologies and Innovative Research (www.jetir.org), ISSN:2349-5162, Vol.11, Issue 9, page no.c616-c627, September-2024, Available :http://www.jetir.org/papers/JETIR2409268.pdf

"Driving Efficiency and Precision: Implementing Activity Based Costing in Modern Business", International Journal of Emerging Technologies and Innovative Research (www.jetir.org | UGC and issn Approved), ISSN:2349-5162, Vol.11, Issue 9, page no. ppc616-c627, September-2024, Available at : http://www.jetir.org/papers/JETIR2409268.pdf