Activity-Based Costing is a set of systems that a
manager can use to trace historical
costs (resources consumed) to
activities and then, through those activities, to products or services provided (Tavana & Rappaport, 1997, 307). ABC allows local managers to develop activities for their cost needs while simultaneously generating service or process costs. The advantage of the detail in ABC for the manager is to give visibility to
value added and non-value activities (Masters, Allenby, La Londe, & Maltz, 1992, 47).