Firms are abandoning Activity Based Costing (ABC) because
A) it does not facilitates the analysis of variances
B) it is complex and time consuming
C) it does not recognize the importance of direct labor as a component of total manufacturing cost
D) the financial nature of the reports does not permit comparisons to be made among different types of products

Question

Quizplus · Accepted Answer

Activity Based Costing (ABC) is a cost accounting method that allocates overhead costs based on each activity that contributes to the production of a product or service. However, it can be complex and time-consuming, which can lead firms to abandon it in favor of simpler methods such as traditional costing. ABC also requires a significant amount of data and resources to implement, making it less cost-effective in some cases.

Firms Are Abandoning Activity Based Costing (ABC) Because