"Contrary to conventional wisdom, activity-based costing (ABC) is not only for large companies. It works just as well for small organization. While it's true that ABC is still being used mostly by large organizations, that's largely because the large-company myth became deeply imbedded in conventional business thinking. That's beginning to change: Smaller businesses are adding ABC to their management tools and recognize it as a powerful aid. A small manufacturer realized that a direct-labor-based, plant-wide manufacturing rate didn't accurately reflect the cost of individual products. Neither did the total cost-based G&A percentage reflect the amount of administrative effort required to support a part, a customer or both. As a result, management assembled a multidisciplinary team to apply the basic concept of ABC to create a cost model that would accurately cost out each of the company's parts."

Do you agree with this statement, and can you think of a challenging situation where the ABC methodology could contribute to the decision-making process of a small organization?