Introducing ABC will not reduce costs in the short term.

Introducing ABC will not reduce costs in the short term because certain costs, particularly fixed costs, remain unchanged regardless of production levels in the short run.

Say, rent for a manufacturing facility and this cost does not vary with the level of production; it remains constant over a specific period, such as a lease term.

In the short term, even if a company implements ABC, it will still incur the same rent expense.

Therefore, while ABC may help identify inefficiencies and lead to cost reductions in the long term by optimising operations and resource allocation, any immediate cost savings from fixed costs are not achievable. The potential for reducing fixed costs typically arises from long-term changes in operations or business strategy, rather than immediate adjustments.