Problem

Setting up an ABC system can be expensive and time-consuming. As business activities are analyzed, they must be broken down into each activity's individual components. The entire process can use up valuable resources as data are collected, measured and entered into the new system. Businesses may also need the assistance of a consultant who specializes in the setup of an ABC system and can provide training on its use. Using software can add an additional expense to the implementation but it can be used to automate many of the manual aspects involved in using ABC. Still, even with the expense, an ABC system can provide substantial advantages to a company in costing products.

Discuss the advantages, disadvantages and issues associated with ABC in comparison to traditional company-wide allocation processes. Introduce in more detail one specific advantage, disadvantage or issue with ABC. Also comment on the implications of using ABC for costing versus an company-wide rate.