Activity based management can be defined as a method where all the activities within in a business are identified and evaluated using the costing method called activity based costing. In other words activity based management is a method through which administration finds out how a company incurs costs from its activities rather than selling its final products. With the help of activity based management a company can find out which are the processes of a company that are proving as strength and weakness of the company. The activity based management helps the business to eliminate such activities that are proving to be a burden on the overall efficiency of the business.
With the help of activity based management a business can manage the cost of employees, facilities, equipment, distribution, marketing, advertisement and other associated activities of a business. The concept of activity based management can be applied to all types of industries such as service industries, manufacturing firms, schools and colleges, nonprofit organizations and all sort of government institutions. With the help of activity based management a company can not only improve its profit but also it can help in forecasting and planning future budget and operational plans of a company.
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