What are the advantages of activity based costing?
It improves business processes, it allocates indirect costs based on a product’s cost driver, or the factor that creates the cost. As costs are allocated per product, a picture starts to emerge of which business processes are performing well and which ones need to be improved
It identifies wasteful products, helps better understand overhead costs.
SK
Related Accounting A Level answers
All answers ▸What is depreciation? Why is its calculation necessary? Give an example of straight line depreciation.
What are the main differences between financial and management accounting?
What is Accounting Based on?
What are the three main elements of Financial Accounts?