Activity Based Costing
this paper is to discuss the theoretic shortcomings of activity-based costing and the decision encompassed on the manner in which cost drivers are chosen for an activity. Theoretical Weaknesses of Activity-Based Costing Without doubt, activity-based costing provides better cost information in comparison to majority of traditional approaches of costing, for instance department and plant wide allocation approaches. Nonetheless, ABC does have its weaknesses and shortcomings. To begin with, activity-based costing systems can be costly and expensive to carry out. In particular, ABC systems necessitate collaboration and coordination across the organization, and as a result necessitate personnel to take breaks and time off from their everyday activities to provide assistance in… Continue Reading...
