Hari_Shyam_Gupta

Activity Based Costing (ABC) is a method for assigning costs to the products or services or projects on the basis of activities that go in them and resources consumed by these activities. ABC has following benefits. Identify specific products or service (basically line item) that is unprofitable. Improve process efficiency by targeting specific area. Allocating right price with the help of accurate product cost information. Find the unnecessary cost and eliminate them However, on some instances, ABC may create complications, like. Requires substantial resources and can become complicated. ABC can be misinterpreted and thus may results in entirely wrong cost allocation. These reports do not conform to GAAP.