Activity-based costing is most likely to yield benefits for companies with all of the following characteristics EXCEPT:
A)a highly competitive environment,where cost control is critical.
B)numerous products that consume different amounts of resources.
C)operations that remain fairly consistent.
D)accessible accounting and information systems expertise to maintain the system.

Question

Quizplus · Accepted Answer

Activity-based costing is designed to allocate costs based on consumption of resources, so companies with fluctuating operations are particularly well-suited for the system. Companies in a competitive environment with multiple products and accessible accounting systems are likely to see the most benefit. However, companies with consistent operations may not experience as much benefit since their costs may be allocated more efficiently using a simpler costing system.

Activity-Based Costing Is Most Likely to Yield Benefits for Companies