ABC costing might lead to: increasing the sales price of low-volume products.
- An organization's activities are identified using the activity-based costing (ABC) technique, which then allocates the cost of each activity to each product and service depending on how much of each is actually consumed. In contrast to traditional costing, this methodology assigns more indirect expenses (overhead) into direct costs.
- ABC is a technique for allocating overhead and indirect costs, such salaries and utilities, to goods and services. The ABC system of cost accounting is built around activities, which are defined as any occasion, project, or task with a clear objective.
- The costs associated with each product are divided by the quantity of units produced to determine the per-unit overhead costs under ABC.
Thus this is the answer.
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