Chpt 4, questions 13 and 14

Chpt 4, questions 13 and 14 - Location, Location, Location...

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13. What are the benefits of activity-based costing? The ABC Approach has the following benefits. Benefits of activity based costing: Identify the most profitable customers, products and channels. Determine the true contributors to and detractors from financial performance. Predicts costs accurately Identification of Root causes for poor performance and finances can be given clarity through Activity based costing. Costs analysis to enhance decision making Enhances the bargaining power with the customers. Facilitates better marketing mix.
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Unformatted text preview: Location, Location, Location and better positioning of products. Track costs of activities and work processes. 14. What are the limitations of activity-based costing? High Costs are associated and additional resources are required; however, the benefits outweigh any cost fa c One party may view the details one way and another set of eyes may see it another (one must be careful whe n The ABC, like product margins, which are directly opposite from the norm costing ystem (Change is hard fo r Perrish)....
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