d) Non-valued activities are actions that are unnecessary, inefficient and
have roomfor improvement. These activities should be identified and
eliminated. Examples ofsuch activities are moving materials in a factory and scheduling of work.When it comes to the traditional, volume-based costing system, it tends toovercost high-volume products and undercost low-volume products. This can be proven when an ABC costing is prepared for the same products. The mishap provided by the traditional costing is revealed in the ABC costing by clearly allocatingoverhead costs to the products instead of just assigning overheads to products basedon direct labor as it is not an appropriate choice of cost driver. The main factors whyABC costing is more appropriate for a factory with many product lines are non-unitlevel overhead costs and product diversity.Direct labor is a unit-level cost driver. Hence, using traditional costing may causesome of the overhead costs to not be incurred during production of multiple productlines. So, activity-based costing ensures that the most convenient cost driver for eachcost pool. Other than that, products produced by a factory are most probably differentform each other. Thus, different ratios of overhead activities are utilized. A unit- levelcost driver will not be able to pinpoint these ratios but use an average instead.The production that comes out of an organization depends on the efficiency levelof the workforce of each department. Employees should make a habit in preparing paperwork. In an activity- based costing (ABC) system, the documentation will help toallocate costs of activities to product lines based on the total activity created.Managers should interview their prime staff, analyze records, put together amultidisciplinary project team and prepare storyboards to have a visual of identifyinggoals and specifying the important activities to formulate the a reliable ABC system.An activity-based management helps to reexamine product pricing to correlatewith the product costs presented by the ABC analysis. The management team plays arole in identifying and removing the non-value-added activities and costs. Whenidentifying activities, managers should be thorough with the activity analysis,