The objectives of Activity Based Costing are as under:
- To improve product costing
- To identify non-value adding activities in the production process which might be a suitable focus for attention or elimination
- To provide required information for decision making
- To reduce the frivolous (nonessential) use of common resources
- To encourage managers to evaluate the efficiency of internally provided services
- To calculate the full cost of products for financial reporting purposes and for determining cost-based prices.
