One limitation of activity-based accounting is that managers must still make some arbitrary cost allocations based on volume.

Question

Quizplus · Accepted Answer

Activity-based costing (ABC) aims to reduce arbitrary allocations by assigning costs more directly based on activities that drive costs. However, some level of arbitrary allocation may still occur, especially when it's challenging to directly link certain overhead costs to specific activities.

One Limitation of Activity-Based Accounting Is That Managers Must Still