Consequences of ABC Analysis

Activity Based Costing > Best Practices

Consequences of ABC Analysis
If Activity-based Costing has been correctly implemented, and it turns out a product is causing losses, does this mean automatically that the product should be discontinued?

activity based costing
The product should not be discontinued. To produce that particular product (in spite of loss) could be a strategic decision. For example, you get ord...Sign up

Loss-making products
Agree with Vijay: there can be strategic or other valid reasons to continue the product, even if a correct ABC analysis shows it is causing losses. O...Sign up

Loss-making products
Firstly one should never make the fatal mistake and discontinue unprofitable products and customers without thorough investigation. There are valid re...Sign up

Kostadin Nedyalkov Krastev
Conversion costs are constraining the product mix. Product and customer sustaining activities can be reorganized to make a better branding. Customer r...Sign up


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Activity Based Costing

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