Activity-Based Costing and Profitability Analysis (AF-057) Training Course

Activity-Based Costing and Profitability Analysis

Traditional costing systems often spread overheads using simple measures such as labour hours or sales value. In organisations with diverse products, services, customers…

5 daysClassroom or online

49Upcoming dates

12Cities

£2,750Fees from

Course overview

Introduction

Traditional costing systems often spread overheads using simple measures such as labour hours or sales value. In organisations with diverse products, services, customers and channels, this can seriously distort reported costs, making some offerings appear profitable when they lose money and hiding the real causes of overhead growth.

This Activity-Based Costing and Profitability Analysis training course shows participants how to trace resources to activities and activities to products, services, customers and channels based on what actually drives cost. Participants learn to design practical activity-based models, including time-driven approaches that are easier to maintain.

The course then focuses on using the results: analysing profitability, informing pricing and product mix decisions, redesigning processes, managing cost-to-serve and supporting strategic decisions with reliable cost information.

Course Objectives

By the end of this training course, participants will be able to:

Explain the limitations of traditional overhead allocation methods
Describe the structure and principles of activity-based costing
Identify activities, resource drivers and activity cost drivers
Build a practical activity-based costing model, including a time-driven approach
Analyse product, service, customer and channel profitability
Use cost-to-serve analysis to improve pricing, terms and service models
Apply activity-based information to process improvement and cost reduction
Plan the implementation and maintenance of an activity-based costing system

Target Audience

This training course is suitable for a wide range of professionals, including:

Cost accountants and management accountants
Financial controllers and finance managers
Pricing and commercial analysts
Operations and process improvement managers
Product and service line managers
Business partners supporting sales and marketing
Consultants and analysts working on profitability improvement

Training Methodology

Participants learn by building a working activity-based costing model in spreadsheets for a realistic multi-product company. Short explanations are followed by guided modelling steps, group analysis of results, decision-making exercises and discussion of how participants can apply the approach in their own organisations.

Target Competencies

Cost system design
Activity and driver analysis
Profitability analysis
Cost-to-serve management
Pricing and product mix decision support
Process cost improvement

Course outline

1Day One: Why Costing Systems Mislead

Cost Behaviour Refresher: Fixed, variable, direct and indirect costs
Traditional Absorption Costing: Methods and typical distortions
The Growth of Overheads: Complexity, variety and support activities
Activity-Based Costing Concepts: Resources, activities and cost objects
Cost Hierarchy: Unit, batch, product, customer and facility-level activities
When Activity-Based Costing Adds Most Value: Signs of cost distortion
Case Study: Comparing traditional and activity-based product costs

2Day Two: Designing the Activity Model

Defining Activities: Choosing the right level of detail
Resource Drivers: Assigning people, systems and facility costs to activities
Activity Cost Drivers: Selecting measurable and meaningful drivers
Data Collection: Interviews, surveys, system data and time studies
Time-Driven Activity-Based Costing: Capacity cost rates and time equations
Unused Capacity: Identifying and reporting idle resources
Practical Exercise: Designing activities and drivers for a support function

3Day Three: Building and Validating the Model

Model Structure: Building transparent and maintainable spreadsheets
Calculating Activity Rates: From resources to cost per driver unit
Assigning Costs to Products and Services: Bills of activities
Validating Results: Reconciliation, reasonableness checks and stakeholder review
Sensitivity of Results: Testing driver and data assumptions
Software and System Options: When to move beyond spreadsheets
Workshop: Building a complete activity-based costing model

4Day Four: Profitability and Cost-to-Serve Analysis

Product and Service Profitability: Interpreting the profit whale curve
Customer Profitability: Order patterns, service demands and payment behaviour
Channel Profitability: Comparing direct, distributor and online channels
Cost-to-Serve Analysis: Identifying high-cost customers and service features
Pricing Decisions: Using activity-based costs to set prices and terms
Product Mix and Rationalisation: Making informed portfolio decisions
Practical Exercise: Developing a customer profitability improvement plan

5Day Five: Activity-Based Management and Implementation

Activity-Based Management: Using cost information to improve processes
Eliminating Non-Value-Adding Activities: Linking costing with lean thinking
Activity-Based Budgeting: Planning resources from expected demand
Implementation Roadmap: Scope, pilot, rollout and maintenance
Change Management: Engaging managers and avoiding defensive reactions
Common Pitfalls: Excessive detail, poor data and lack of ownership
Final Presentation: Recommending decisions based on activity-based insights

Frequently asked questions

How long is the Activity-Based Costing and Profitability Analysis course?

The course runs over 5 days of classroom training, usually Monday to Friday.

When is the next Activity-Based Costing and Profitability Analysis course?

The next public date is 7 - 11 Dec 2026 in Frankfurt. There are 49 upcoming dates in total.

Where is this course held?

Upcoming sessions run in Frankfurt, London, Barcelona, Amsterdam, Cape Town, Dubai, Geneva, Istanbul, Madrid, Munich, Rome, Vienna.

Can I take Activity-Based Costing and Profitability Analysis online?

Yes. Every date can also be joined live online in a virtual classroom with the trainer, for £1,280 per participant. Choose "Live online" in the dates table when you register.

How much does the course cost?

Fees start from £2,750 per delegate, depending on the city. Fees include tuition and course materials.

Do participants receive a certificate?

Yes. Delegates who complete the course receive a London Leadership Management Innovation certificate of completion.

Can this course be delivered in-house for our team?

Yes. LLMI can tailor and deliver this course privately for your organisation at your premises or in one of our training cities.

Course information last updated 14 November 2026.

Activity-Based Costing and Profitability Analysis

Course overview

Introduction

Course Objectives

Target Audience

Training Methodology

Target Competencies

Course outline

Dates and fees

Frequently asked questions

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