The primary weakness with traditional activity-based costing that relies on time estimates to determine cost per output is employees routinely over-estimate the percentage of time they spend on productive activities.

Question

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Traditional activity-based costing often relies on self-reported time estimates, which can be inaccurate due to employees overestimating their productive time, leading to skewed cost allocations.

The Primary Weakness with Traditional Activity-Based Costing That Relies on Time