The basic ideas justifying the use of activity- based costing (ABC) and activity-based budgeting (ABB) are well publicized, and the number of applications has increased. However, there are apparently still significant problems in changing from existing systems.

Requirements:
(a) Explain which characteristics of an organization, such as its structure, product range, or environment, may make the use of activity-based techniques particularly useful.
(b) Explain the problems that may cause an organization to decide not to use, or to abandon use of, activity-based techniques.
(i) Unit-level activities;
(ii) Batch activities;
(iii) Product-sustaining activities;
(iv) Facility-sustaining activities.
Other analyses focus on ‘value adding’ and ‘non-value adding’ activities.
Explain what is meant by ‘non-value adding activities’, and discuss the usefulness of this form of analysis.