Critical thinking The chapter listed the following six important points to remember about activity based costing. Follo ving each point are the comments of a cynic in italies. Discuss one of these points. How would you respond to the eynic's comments? (it is okay to agree; even eynies have good points to make) 1. The allocation of indirect costs is at least somewhat arbitrary, even using sophisticated accounting methods. "This means no method gives you a true cost; all are arbitrary. So why go to the trouble of implementing ABC?) 2. Activity-based costing provides more detailed measures of costs than traditional allocation methods. ("Who needs more detail? Life is already too complicated") 3. Activity-based costing can help marketing people by providing more accurate product cost numbers for decisions about pricing and which unprofitable products the company should eliminate. ("Why should accountants want to help marketing people?) 4. Production also benefits because activity-based costing provides better information about the cost of each activity. In practice, ABC helps managers identify cost causing activities. To manage costs, production managers learn to manage the activities that cause costs. C"If production people know their jobs, they do not need help from accountants".) Activity-based costing provides more information about product costs than traditional methods but requires S. more record-keeping. Managers must decide whether the benefits of improved decisions justify the additional record-keeping cost. CABC sounds like a lot of work Why bother?") Installing activity-based costing requires teamwork among accountants, production managers, marke 6. managers, and other nonaccounting people. (tYou will never get these people to work together Accountants a marketing people? You have got to be kidding!")