Comment on post below-thanks

Is ABC info always better than Average-cost? No not always. ABC costing will surely be more detailed and most likely more accurate, however will an organization's benefits of ABC outweigh the added intricate, time consuming costly characteristics?

One factor to consider in this would be the amount of overhead costs an organization tends to operate with. ABC should be used "when overhead is high, because small changes in each product cost can make a large difference overall." A company who produces one single product would likely have low overhead as most of the costs would be direct costs associated with the single product. In this situation, ABC benefits would not outweigh the costs and time required to produce ABC information.

While ABC isn't allowed for external financial reporting, companies may find it useful to enact an ABC system to more effectively analyze cost data. Since ABC does not conform to GAAP for external reporting requirements, a company essentially has to report on costs twice. Its important for organizations to consider the added time and cost of now reporting two different ways.