The benefits and limitations of Activity Based Costing, explained by our Melbourne small business accountants
Our Melbourne small business accountants define Activity Based Costing as a costing method that allocates overhead costs on the basis of activities that drive costs. In an Activity Based Costing system, activities are assigned to products in two stages: identification of activities and identification of cost drivers. Below our small business accountants in Melbourne have listed the benefits and limitations of Activity Based Costing.
Benefits of Activity Based Costing
- Increases the accuracy of costs
Limitations of Activity Based Costing
- Can be expensive to implement and maintain
For more information regarding Activity Based Costing, please contact our Melbourne small business accountants.