Disadvantages of actual costing include

Question

Quizplus · Accepted Answer

Actual costing has the disadvantage of not providing accurate unit cost information on a timely basis as it requires the collection of actual costs which can be time-consuming. Additionally, the unit costs produced using actual costing can fluctuate from period to period due to changes in the actual costs incurred. Furthermore, estimates must be used when calculating the actual overhead rate which can introduce errors into the costing system. Therefore, both options A and B are true and represent the disadvantages of actual costing.

Disadvantages of Actual Costing Include