Activity-based costing (ABC) was initially developed for the manufacturing industry and has become the standard for performing cost allocations. The techniques it describes are also useful in allocating non-interest income. Essentially, it involves allocating costs on some basis defined by resource consumption.

The key is finding the right basis, or cost driver, to use in allocating cost. Using personal interviews and Web based surveys, The Kafafian Group works with departmental managers to determine the best method for distributing costs. Our process values the unique insight of bank staff to enhance data. We also perform "full absorption" costing. Using this technique, all of the bank's operating expenses are allocated somewhere. Nothing is hidden in full absorption costing and it is preferable to standard costing.