abc recognized that overhead costs are related to production and sales volume.
it provide much better insight into what drivers overhead costs.
it can be applied to drive a more realistic cost in a complex business environment.
a better assistance with decision making.
it provide opportunities to control overheads by managing cost drivers.
abc can be applied to all overhead costs, not production overheads.
dis. more complex than absorption costing.
the choice of both activities and cost drivers might be inappropriate.
some cost ,such as rent ,rates and building depreciation, still require to be
apportioned using the traditional method
the benefits obtained from abc might not justify the costs.
some overhead may result from multiple cost drivers.