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ABC

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › ABC

  • This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.
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  • August 17, 2017 at 7:40 am #402159
    adarsh1997
    Participant
    • Topics: 646
    • Replies: 282
    • ☆☆☆☆

    Hi John!

    Could you explain why the following statement about ABC is correct?

    – ABC will be of limited benefit if the overhead represents a small proportion of the overall costs.

    1. My understanding is that may be adopting ABC, a business could find out that in fact overheads do represent a large proportion of the overall cost.

    2. Please locate where I am getting things wrong.

    Thanks.

    August 17, 2017 at 9:39 am #402171
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54812
    • ☆☆☆☆☆

    ABC does not change the total of the overheads, it only changes how the overheads are charged to the different products.
    If total overheads are small then the overheads per unit will be small anyway.

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