Which of the following statements is false concerning the use of ABC in service industries?

a. In most service industries, a large portion of overhead costs are company-wide costs.

b. When using ABC for service industries, special methods must be used to identify cost pools and cost drivers due to the unique nature of the services offered.

c. The notion regarding eliminating as many non-value-added activities as possible applies equally to manufacturers and service providers.

d. All of these statements are true concerning the use of ABC in the service industries.

Question

Business

Kayden Barton

5 March, 16:46

Which of the following statements is false concerning the use of ABC in service industries?

a. In most service industries, a large portion of overhead costs are company-wide costs.

b. When using ABC for service industries, special methods must be used to identify cost pools and cost drivers due to the unique nature of the services offered.

c. The notion regarding eliminating as many non-value-added activities as possible applies equally to manufacturers and service providers.

d. All of these statements are true concerning the use of ABC in the service industries.

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Answers (1)

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Paula Holden · Answer 1

b. When using ABC for service industries, special methods must be used to identify cost pools and cost drivers due to the unique nature of the services offered.

Explanation:

The cost pool method are the same we should look for activities which add value to the product to provide a more accurate product costing.

In cases of services the company will also determinate activities considering this premise therefore, there is no especial nature to offer to the client.