The benefits arising from the introduction of activity-based costing are likely to be greater where:
i. overhead is a large proportion of total cost.
ii. implementation costs are not high due to the support of advanced IT systems.
iii. batches are of a similar size.
A) i and ii
B) i and iii
C) ii and iii
D) None of the given answers

Question

Quizplus · Accepted Answer

Activity-based costing is particularly useful when overhead costs make up a large proportion of total costs, as it allows for a more accurate allocation of these costs to products or services. The use of advanced IT systems can also reduce implementation costs and make the process easier. The similarity of batch sizes is not necessarily a key factor in the benefits of activity-based costing.

The Benefits Arising from the Introduction of Activity-Based Costing Are