ABC stands for a method that assigns overhead costs and also indirect costs that can be things like utilities and factory supplies. These are based on activities or events that are associated with a specific goal. One of the benefits that come with is being more accurate with pricing decisions. Another benefit is that it helps to eliminate overhead wastes.

One of the drawbacks to this method is tie consumption and the costs that come with this to gain the right amount of data. Setting up an ABC system can be time-consuming and expensive to maintain, but when utilized it provides management with valuable information that can be used to improve the efficiency of business processes and increase the product profit margins.(Woodruff, 20219)

I think this would benefit a company by helping them prepare for the future costs and manufacturing problems that may occur. The business would become very organized and efficient by being able to know what costs they need to get rid of. This type of accounting method can reapplied to any industry because most of them have uncontrollable expenses.

After reading the article it seems that having these be time based makes it more of a smooth and less strenuous process.

Wild, J. (2021). Fundamental accounting principles with CONNECT access (25th ed.). McGraw-Hill Higher Education. eText

Woodruff, J. (2019, January 25). The disadvantages & advantages of activity-based costing. Small Business - Chron.com. Retrieved June 9, 2022, from

Do you agree with your classmates' responses concerning their definition, benefits, and drawbacks of an ABC system? Explain. Would you suggest a different type of business that could use ABC methods to improve the rate(s) at which overhead costs are applied?