Which of the following items might cause activity-based costing (ABC) to be more difficult to implement in a service company than in a manufacturing company?
A) The lack of direct labor.
B) The lack of facility-level costs.
C) The lack of repetitive activities.
D) The lack of overhead costs.

Question

Quizplus · Accepted Answer

Service companies typically have more variety in the activities they perform, which may make it more challenging to accurately identify and allocate costs to specific services or products. In manufacturing companies, activities are often more repetitive, making it easier to identify and track costs. The lack of direct labor, facility-level costs, or overhead costs may also present challenges in implementing ABC, but these factors do not necessarily make it more difficult for a service company specifically.

Which of the Following Items Might Cause Activity-Based Costing (ABC)