Which of the following is a limitation of activity-based costing?
A) More cost pools
B) Less control over overhead costs
C) Poorer management decisions
D) Some arbitrary allocations continue

Question

Quizplus · Accepted Answer

Even with activity-based costing, there may still be some arbitrary allocations of costs, which limits the accuracy of the costing system. However, options A, B, and C are not limitations of activity-based costing but rather benefits of the system. Activity-based costing uses more cost pools, which improves accuracy, provides more control over overhead costs, and leads to better management decisions.

Which of the Following Is a Limitation of Activity-Based Costing