Accounting · Cost Accounting
Which of the following conditions in a manufacturing business does NOT justify switching from traditional absorption costing to activity-based costing (ABC) for overhead allocation?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The business operates in a highly non-competitive, monopolistic market with stable margins.✓
- 2The manufacturing process is highly machine-intensive with multiple steps tailored to complex product lines.
- 3The proportion of manufacturing overhead costs has significantly exceeded prime costs.
- 4The business is planning to replace its standalone information system with an ERP system.
Correct answer
The business operates in a highly non-competitive, monopolistic market with stable margins.
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