Provide any 4 issues that a manager must consider in implementing an activity-based costing system.

Expert Solution

-->> ABC is a costing system used to allocate overhead cost to the unit of product or service by following two stage allocation process.firstly, it assigns cost to the activities .secondly, it assigns cost to products based on products use of activities.

=>> Issues that a manager must consider in implementing an activity-based costing system are :-

• Decision-making :- This stage involves design choices that should be made before starting the implementation. These choices will define the characteristics of the system and will depend on its primary objective.

In this stage factors to be consider is :- a) time, b) cost (software development, interfaces, how frequently is info. needed), c) corporate approval, d) approval from external auditors e) expertise.

• Implementation :- Objectives of this stage considered are

a) Ensure implementation team has adequate knowledge of ABC to allow the team to design an appropriate system.

b) Ensure management learns the concepts and benefits of ABC so they will accept and use the info. generated by system .

c) Ensure that the design and data gathering steps of project will be performed efficiently.

ekkarill92 answered 1 year ago

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