The benefits of ABC/ABM are higher when the risks of cost distortion is high.

Question

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When the risks of cost distortion are high, traditional costing methods can lead to inaccurate or misleading cost information. ABC/ABM, on the other hand, helps to identify and allocate costs based on their actual consumption by different products, services, or activities. Therefore, the benefits of ABC/ABM are higher when cost distortion risk is high, as it helps to improve decision-making, cost management, and pricing strategies.

The Benefits of ABC/ABM Are Higher When the Risks of Cost