Which of the following are limitations of ABC?
i. The system requires significantly more data.
ii. The system requires extensive updating if the product range changes.
iii. The inclusion of facility level costs greatly increases the accuracy of cost per unit.
A) i and ii
B) i and iii
C) i, ii and iii
D) None of the given answers

Question

Quizplus · Accepted Answer

i. The system requires significantly more data: ABC requires more detailed and accurate data on the cost drivers, which can increase the amount of time and effort needed to collect and process the information.
ii. The system requires extensive updating if the product range changes: If new products or changes are introduced, the entire ABC system may need to be updated, which can be time-consuming and costly.
iii. The inclusion of facility level costs greatly increases the accuracy of cost per unit: This is a benefit of ABC, not a limitation. Including facility-level costs, such as maintenance and rent, can provide a more accurate picture of the true cost of producing a product.

Which of the Following Are Limitations of ABC