ABC-Facility sustaining related problem

This topic has 4 replies, 3 voices, and was last updated 13 years ago by acca7872.

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August 24, 2012 at 12:30 pm #54223
acca7872
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Dear experts;
whether depreciation is facility sustaining or nor in ABC?. if yes, whether we need to avoid it or not?
August 24, 2012 at 2:29 pm #104632
forhad
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Facility-level activities such as plant depreciation, property taxes, utilities are activity costs. We need to recognise these.
August 27, 2012 at 6:06 am #104633
acca7872
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from text, i understand that we need to avoid these costs in ABC bcoz there is no direct cost drivers can be identified for these activities. and this is one of the drawback of ABC.
looking for some experts opinions.
September 16, 2012 at 12:30 pm #104634
Anonymous
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good question, how cost can be avoided only because ABC chosen?
September 17, 2012 at 9:40 am #104635
acca7872
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for facility sustaining costs, we can not find an accurate cost drive. eg. depreciation, insurance etc. so in most case ABC will exclude this cost.
this will adjust in the margin to the costs. So we can this is one of the demerit of ABC.
pls refer F5 BPP book.
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