When does activity-based costing have the best results?
A)When it is used as a quick,one-time fix.
B)When the company has a short-term time horizon.
C)When it is used as a process that requires patience and participation.
D)When it is used as a means to motivate employees to work better.

Question

Quizplus · Accepted Answer

Activity-based costing is a process that requires patience and participation. It involves analyzing and identifying all the activities that are required to produce a product or service and then assigning costs to those activities based on their level of consumption. This approach takes time and effort to implement, but it can provide more accurate costing information and help companies make better decisions about pricing, product mix, and process improvements. Using ABC as a quick, one-time fix or as a means to motivate employees is unlikely to yield the best results. Similarly, ABC is not limited to companies with a short-term time horizon; it can be useful for organizations of all sizes and types, regardless of their time horizon or industry.

When Does Activity-Based Costing Have the Best Results