Please make more detailed explaination (much more) for this answer:

The benefits of Activity Based Costing in this case are as follows:

• Activity Bases Costing enables you to analyse the cost of the product accurately and as a result leading to more accurate pricing decisions.
• It enables us understanding all the overheads and cost drivers so that we can avoid all the unnecessary costs which are leading to high pricing of the product.
• Activity Based Costing also helps us to provide a more precise breakdown of indirect costs which ultimately helps us to avoid the illegitimate costs.
• Activity Based Costing makes the costly and non-value adding activities more visible, allowing managers to reduce or eliminate them.
• It also enables the management in decision making by analysing the cast and revenue relationship of any product.
• In the above case, the company's profits are declining and the manufacturing people along with the management accountant are considering the conventional costing as a reason for the declining profits. Therefore, it is very important to implement the Activity Based Costing in order to determine the actual reason for the declining profits.

The Cost and Limitations of the Activity Based Costing in this case are as follows:

• Activity Based Costing is not suitable for Small Manufacturing firms as the cost of implementing the Activity Based Costing is higher compared to cost of conventional costing method.
• If correct activities are not determined than the cost determined through this method will not give accurate results with respect to cost of the products.
• It is almost impossible to allocate all overhead costs to specific activities.
• The choice of both activities and cost drivers might be inappropriate which will ultimately result in the incorrect costing of the products.
• In the given case, Activity Based Costing should be implemented only if the company has enough points supporting the same and along with that the company has funds to implement the same.

The question: Analyze for craving that outlines the benefits, costs and limitations of Activity- based costing for the case that is in the picture. Please analyze in long version. (picture)

C8.46 Activity-based costing; traditional costing: manufacturer LO8.1 Cravings for Cakes Pty Ltd manufactures a wide range of delicious cakes and pastries. At the annual Christmas 8.2 party, the company's owner, I.M. Craving, treated his employees to a nostalgic review of the firm's history as told them: 8.3 8.4 Twenty years ago we had only three product lines-pies, finger buns and lamingtons. We were flat 8.5 producing large volumes of each product, using very simple machinery and a lot of hard work. 8.6 My, how things have changed! We still make and sell a lot of pies and lamingtons, but we glee produce a wide range of low-volume lines, such as Danish pastries, doughnuts and vanilla slices. I he you sighing, and no wonder; these low-volume products are a pain in the neck. They are complex in produce and their short production runs involve a lot of extra machinery setups and material handling But the accountants tell me that these speciality lines have wonderful profit margins, so we must not complain. Craving then outlined the dramatic changes that had occurred within the business over the past 20 years. In the factory he had seen the introduction of computer-controlled mixing machines and ovens that replaced a lot of the direct labour operations, and an increased emphasis on quality and delivery performance. Indeed, right across the business, more and more effort had been placed on keeping the customer happy. However, his speech cast a gloomy shadow across the Christmas festivities when he warned: Despite all this progress, the company seems to be struggling. Our profits are declining, and if things don't improve over the next few months, this may be our last Christmas together. To survive we must all work very hard. We must focus on increasing sales, particularly of our high-margin speciality products. The company's management accountant, Ursula B. Bright, had become concerned about the conventional product costing system at Cravings for Cakes. The manufacturing people were also sure that the costing system was distorting product costs