A company is proposing the introduction of an activity-based costing (ABC) system as a basis for much of its management accounting information.

(a)Briefly describe how ABC is different from a traditional absorption approach to costing and explain why it was developed.

(b)Discuss the advantages and limitations of this 'approach based on activities' for management accounting information in the context of:

(i)Preparing plans and budgets

(ii)Monitoring and controlling operations

(iii)Decision-making, for example, product deletion decisions.