- Use ABC to estimate the cost of an individual and a business return. Make clear any assumptions you have made. (12 marks)
- How might these estimates help explain the poor profitability experienced last year and what implications do they have to they have for the firms’ pricing policy? (7 marks) Question 4 – Altering ABC’s Costing and Pricing policies at TaxEzy.
- Explain the advantages and disadvantages of ABC relating your discussion t TaxEzy. (10 marks) Question 4 – Altering ABC’s Costing and Pricing policies at TaxEzy.
- Julie Bishop uses the ABC approach based on the above data as a ‘starting point’. Can you suggest any other ways of altering the firms’s costing and pricing policies which will be more beneficial to TaxEzy? (6 marks) Question 4 – Altering ABC’s Costing and Pricing policies at TaxEzy.
Question 4 – Altering ABC’s Costing and Pricing policies at TaxEzy
Despite the significant preference tagged to the use of the ABC costing method, there are
multiple drawbacks tied to its adoption as a costing and pricing approach. For instance, the ABC
costing process may be expensive for the company to adopt and maintain, cannot stand alone as
a pricing approach and also increases the risks of cost misinterpretation. Besides ABC requires
specific software, numerous interviews, analysis and logs which is too expensive and time
consuming to TaxEzy (Bragg, 2010). Therefore, seeking for alternative approaches to alter ABC
as a costing technique is paramount to the success of TaxEzy in efficiently pricing its activities. Question 4 – Altering ABC’s Costing and Pricing policies at TaxEz………
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