'ABC is still at a relatively early stage of its development and its implications for process control may in the final analysis be more im- portant than its product costing implications. It is a good time for every organisation to consider whether or not ABC is appropriate to its par- ticular circumstances. J Innes & F Mitchell, Activity Based Costing, A Review with Case Studies, CIMA, 1990. You are required:

(a) to contrast the feature of organisations which would benefit from ABC with those which would not; (8 marks)

(b) to explain in what ways ABC may be used to manage costs, and the limitations of these approaches; (11 marks)

(c) to explain and to discuss the use of target costing to control product costs. (6 marks) (Total 25 marks)