Firms are abandoning activity-based costing (ABC)because
A)it does not facilitate the analysis of variances
B)it is complex and time consuming
C)it does not recognize the importance of direct labor as a component of total manufacturing cost
D)the financial nature of the reports does not permit comparisons to be made among different types of products

Question

Quizplus · Accepted Answer

Many firms are abandoning activity-based costing (ABC) because they find it complex and time-consuming to implement. Despite its advantages in providing more accurate cost information, ABC requires significant effort to establish detailed activity pools and cost drivers. As a result, some companies are turning to simpler costing methods, such as traditional or throughput costing, that do not require as much effort to implement.

Firms Are Abandoning Activity-Based Costing (ABC)because