COST ACCOUNTING
ACTIVITY BASED MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which of the following is/are (a) valid limitation(s) of ABC? (Select all applicable answers)
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The level of complexity increases when the system is used for both activity management and product costing
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ABC offers inaccurate costing information
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It can be very costly to maintain an ABC system
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ABC distorts pricing decisions
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Explanation:
Detailed explanation-1: -Question: Which of the following is a limitation of activity-based costing?-ABC can be expensive to use-more cost pools-poorer management decisions-less control over overhead costs.
Detailed explanation-2: -The disadvantages of the ABC method include it being expensive to implement, as well as maintenance, being a time-consuming process, being used only for internal reporting, and having the possibility of some excluded costs.
Detailed explanation-3: -One of the limitations of ABC analysis is that excess stocks are always in jeopardy of obsolescence or damage.
Detailed explanation-4: -Which of the following is a limitation of activity-based costing? Activity-based costing can be expensive to use.
There is 1 question to complete.