An activity-based costing system should include all of the activities carried out in an organisation because any simplification will inevitably result in inaccuracy

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While an activity-based costing (ABC) system aims to provide a more accurate method of cost allocation by assigning costs based on activities, it is not practical or cost-effective to include all activities due to the complexity and the diminishing returns on the accuracy of cost information versus the effort required. Simplifications and approximations are often necessary to make the system manageable and economically viable.

An Activity-Based Costing System Should Include All of the Activities