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Hi sir,
Chapter 1
Q4) could you explain me how this statement is true.
The cost of using ABC is greater than the benefits. How exactly do you say its true.
Can’t the benefit may be greater too sometime.Also when we use methods such as absorption costing, marginal costing and activity based costing – we use them to deal with the overheads. However, is it only production overhead costs that we consider or both production and non production?
Thank you for your support sir!
The question does not say “the cost of using ABC is greater than its benefits”. It says that “the cost of using MAY be greater than its benefits”
That is true, it may (might) be greater then the benefits (and of course it may (might) be lower than its benefits).
For the valuation of inventory we only ever consider production overheads.
For determining a selling price then it is common to look at all overheads.
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