What is Activity Based Profit Management (ABPM)?
Activity Based Costing Using this simple framework of translating financial data into activities and cost drivers provides a robust basis for costing & profitability analysis. This activity model reflects what people do, rather than merely what is spent. Based on cause & effect tracing rather than lots of allocations, this method results in more reliable product costing. Using this method many companies have found their products to have been under costed or over costed by 25% to 100%. ABPM shows how cost is consumed in serving different customers, in various markets, via various channels. Typically, a few customers generate enormous profits – often more than the companys total. A vast number operate around the breakeven point. As shown in the graph, some customers just lose you money!
