Why are more organizations adopting activity-based costing systems?
A) Computer technology has increased the costs of developing and operating ABC systems.
B) Indirect costs are more important in automated manufacturing environments.
C) Less competition.
D) Less diversity in product mix offered to customers.

Question

Quizplus · Accepted Answer

In automated manufacturing environments, indirect costs such as machine setup time, maintenance, and repair, are more significant. Activity-based costing (ABC) systems allocate indirect costs accurately to products or services, making it a suitable approach for organizations operating in such environments. A is incorrect because technological advancements have made ABC systems more cost-effective. C and D are irrelevant and not related to the adoption of ABC systems.

Why Are More Organizations Adopting Activity-Based Costing Systems