Question

What might be an impediment in changing from a traditionally based costing system to an activity-based costing system?

Management may not be in favour of a change.

Excessive costs may be incurred to assist in capturing costs.

Some costs would still have to be allocated arbitrarily after the changeover.

All of the above are impediments.

Answer 1

Answer: All of the above are impediments.

Explanation:

Activity-based costing system and Traditionally based costing system are two different methods for allocating overhead costs to products. The differences are in the accuracy and complexity of the two methods. Traditional based costing is more simplistic and less accurate than Activity-based costing and typically assigns overhead costs to products based on an arbitrary average rate. Even after changing from Traditional based costing to Activity-based costing Some costs would still have to be allocated arbitrarily after the changeover. Excessive costs are incurred to assist in capturing costs so sometimes management may not be in favor of a change.