 Activity-based management, known as ABM, is an extension of activity-based costing. By providing better product costing information to management, ABM helps focus on reducing costs, improving processes, and improving decision-making. One of the benefits of activity-based management is improved pricing decisions. When companies have more accurate product costs, they can have more accurate product pricing to customers. Another benefit assists with product mix decisions. Again, having improved product costs means more accurate gross margins. Management might decide to shift production towards a more profitable product. Activity-based management assists in cost-cutting decisions and allows managers to look at costs as either value-added or non-value-added. Value-added costs are activities that increase the perceived worth of a product or service to a customer. Not all costs are value-added, however. Some are considered non-value-added. These activities add cost to a product without increasing the perceived value. Although not all of these costs can be eliminated, management spends considerable time looking to reduce these types of costs. Finally, activity-based management assists in the planning and control functions of management.