A disadvantage of resource consumption accounting is that it may lead managers to overproduce, in order to avoid showing underutilized production capacity.

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Quizplus · Accepted Answer

Resource consumption accounting focuses on measuring and allocating production costs based on the resources consumed rather than the actual output. In such a system, unused production capacity may be seen as a cost, leading managers to produce more than necessary to avoid showing underutilized capacity and thus lowering the overall cost per unit. This can result in overproduction and build-up of inventory, which in turn can lead to additional costs such as storage, obsolescence, and depreciation.

A Disadvantage of Resource Consumption Accounting Is That It May