Comment on post below-thanks
Is ABC info always better than Average-cost? No… not always. ABCcosting will surely be more detailed and most likely more accurate,however will an organization's benefits of ABC outweigh the addedintricate, time consuming costly characteristics?
One factor to consider in this would be the amount of overheadcosts an organization tends to operate with. ABC should be used"when overhead is high, because small changes in each product costcan make a large difference overall." A company who produces onesingle product would likely have low overhead as most of the costswould be direct costs associated with the single product. In thissituation, ABC benefits would not outweigh the costs and timerequired to produce ABC information.
“While ABC isn't allowed for external financial reporting,companies may find it useful to enact an ABC system to moreeffectively analyze cost data.” Since ABC does not conform to GAAPfor external reporting requirements, a company essentially has toreport on costs twice. It’s important for organizations to considerthe added time and cost of now reporting two different ways.
