Here are some of the advantages of ABM:
It identifies activities that do not add value. By attaching a monetary value to a process, you are able to assess activities from a
It provides insight into cost by unit of measurement (customer, channel, unit of production). Customers and channels do not have the same resource consumption profile. ABM will tell you if the Strategic Alternative is being directed at the right aspects of your business.
By using ABM, you can get a better understanding of resource consumption and allocation. This technique will show you the true cost of a Strategic Alternative by creating a more comprehensive picture of its cost.
Here are some of the weaknesses of ABM:
It may create confusion over unit costs in the short run. Once costs are fully loaded into products, activities, and channels, executives may make
This method does not take into account nonfinancial measurements. It is important to be cost-and profit-conscious, but not at the expense of quality and service. Driving your costs to zero is a going-out-of-business strategy.
Costs by product, channel, division, and unit provide a clear picture of the
To summarize, ABM is a method of looking at your cost structure based on how you do things and not what you
Robin Copper and Regine Slagmulder, "Activity-Based Costing Management System Architecture", Strategic Finance , October 1999, vol. 81, p. 4.
AT ITS MOST BASIC LEVEL
, regression analysis is a statistical technique for developing an equation that describes the relationship between two or more
The following variables are represented in the equation:
Y equals the dependent variable.
x n equals the independent variables; the parameters used to predict y.
a equals the value of y when all independent variables are zero.
b 1 equals the regression coefficient that indicates the impact that the independent variables have on the dependent variable.
One variable, the dependent variable, is the variable that you are trying to understand. The dependent variable is the answer. The other variable(s), the independent or explanatory variables, are the factors you feel affect the (dependent) variable or the answer. Let's say a national general merchandise retailer may think that there is a direct relationship between sales and advertising expenditure; more
 Terry E. Dielman, Applied Regression Analysis for Business and Economics (PWS-Kent, 1991).