Which of the following is not a limitation of activity-based costing
A)Implementing an activity based costing system is more costly than implementing a traditional direct labour-based costing system.
B)In practice, most managers insist on fully allocating all costs to products, customers, and other costing objects in an activity based costing system. This results in overstated costs.
C)More accurate product costs may result in better decisions.
D)Changing from a traditional direct labour based costing system to an activity-based costing system changes product margins and other key performance indicators used by managers.

Question

Quizplus · Accepted Answer

This statement is not a limitation of activity-based costing; it is actually a benefit. Implementing an activity-based costing system may be more costly than a traditional direct labour-based system, managers may insist on fully allocating costs resulting in overstated costs, and changing to an activity-based costing system can change product margins and other key performance indicators, all of which are limitations of activity-based costing.

Which of the Following Is Not a Limitation of Activity-Based