Product A is overcosted (looks less profitable than it is). Product B is undercosted (looks more profitable than it is). Bad decisions follow.
Implementing an ABC system involves a four-step process: activity based costing meaning
: The final items being costed, typically products, services, or customers. How ABC Works: A 5-Step Process Product A is overcosted (looks less profitable than it is)
Two products: and Cabinets (low volume, complex) . activity based costing meaning