The following information was provided by a client to you re…

The following information was provided by a client to you re…

The following information was provided by a client to you regarding Activity Based Costing (ABC). The client is very happy that you have just taken ACCT& 203 at TCC and that you have a thorough understanding of ABC Costing. Check ALL that apply below to show the client the items that DO NOT APPLY to ABC Costing (items that are FALSE with regard to ABC Costing):
ABC Costing cannot be used for internal reporting as it is incompatible with accounting standards
ABC Costing shows creditors and investors the true cost or margin of a product as it ignores idle capacity and organization sustaining activities.
Management is usually resistant to the use of ABC Costing
ABC Costing prevents cross-subsidizing of products
ABC Costing ignores total overhead in its calculation as this represents idle capacity and organization sustaining activities
ABC Costing is mostly useful when a company produces few different products that consume resources homogeneously
ABC Costing cannot be used for external reporting.
ABC Costing can be very time consuming
ABC Costing does not allocate idle capacity to products

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