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“more accurate cost estimates will be produced using ABC than AC when manufacturing only one product”
may I know why this statement is inaccurate?
thank you in advance 🙂
If there is only one product that ABC and traditional absorption costing will give the same result, because all of the overheads are absorbed into just that one product regardless of which method is used.
It is only when there is more than one product that ABC charges the overheads to each of the products more sensibly that if we used traditional absorption costing.
Have you watched my free lectures on ABC? The lectures are a complete free course for Paper PM and cover everything needed to be able to pass the exam well 🙂
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