Does activity-based costing adequately account for all costs…
(Decision making; ethics; writing) Many manufacturers are deciding to service only customers that buy $10,000 or more of products from the manufacturers annually. Manufacturers defend such policies by stating that they can provide better service to customers that handle more volume and more diverse product lines.
a. Relate the concepts in the chapter to the decision of manufacturers to drop small customers.
b. Are there any ethical implications of eliminating groups of customers that could be less profitable than others?
c. Does activity-based costing adequately account for all costs that are related to a decision to eliminate a particular customer base?
