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Accounting Information Systems

10th Edition
Hall + 1 other
Publisher: Cengage Learning,
ISBN: 9781337619202

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BuyFindarrow_forward

Accounting Information Systems

10th Edition
Hall + 1 other
Publisher: Cengage Learning,
ISBN: 9781337619202
Chapter 7, Problem 17DQ
Textbook Problem
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Discuss the disadvantages of activity-based costing.

To determine

Enlist some of the disadvantages of activity-based costing.

Explanation of Solution

Activity Based Costing:

The approach of activity based costing keeps the record of resources usage by operating activities and cost incurred for such activities. Managers can take effective and right decision with the help of activity based costing.

Lean manufacturing organizations uses activity based costing technique as it helps them to maximize output by using limited resources in an effective and efficient manner.

Apart from holding so many pros there are some cons which are also associated with activity based costing. These can be briefed as follows:

  • Expensive: Activity based costing involves additional set of activities which need to perform in allocating cost situated to a particular activity. Performing such additional activities leads to incurring additional expenditure by organization...

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Chapter 7 Solutions

Accounting Information Systems
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