Activity-based costing (ABC) is often chosen in lieu of using a traditional costing system. While it does have many advantages, it also has some disadvantages. Of the following, which would be considered a disadvantage of ABC?
A) Improved product-mix decisions
B) Initial costs
C) Manufacturing efficiency
D) Sound make-or-buy decisions

Question

Quizplus · Accepted Answer

This question requires that you determine what would be considered disadvantages of activity-based costing. Disadvantages include initial costs (Choice B) in addition to its being time-consuming, employee pushback, and the need for two costing systems. Improved product-mix decisions (Choice A), Manufacturing efficiency (Choice C), and Sound make-or-buy decisions (Choice D) are all considered advantages of ABC, and that makes them incorrect selections.

Activity-Based Costing (ABC) Is Often Chosen in Lieu of Using