Which of the following is a limitation of activity-based costing?
A) More cost pools
B) Less control over overhead costs
C) ABC can be expensive to use
D) Poorer management decisions

Question

Quizplus · Accepted Answer

Activity-based costing can be expensive to use due to the detailed data collection and analysis required. This can make it unfeasible for smaller companies or those with limited resources. However, having more cost pools can actually provide more accurate and detailed information for management decision-making. Additionally, ABC can provide better control over overhead costs by allocating them based on actual usage rather than broad estimates. Therefore, options A and B are not limitations, and option D is not necessarily true.

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