Discussion – The answer should not be too long.
Rick White has recently discussed the intent to diversify Swiss Chocolateâ€™s product line with Steve Smith. Smith notes that the new product will be a dark chocolate candy bar featuring various types of dried fruit and a higher percentage of cacao, which will be touted as a heart-healthy product due to high antioxidant nutritional qualities. This differs from the current basic milk-chocolate bar that Swiss Chocolate manufactures presently, which has no added fruit. White has related the fact that the company expects this coming yearâ€™s milk-chocolate bar volume to decline and the new product volume to rise. There will be a new machine required to accommodate the new product, and it will run in batches.
White suggests that Smith consider Activity-Based Costing for completing this analysis. Before Smith undertakes this analysis, he considers the advantages and disadvantages of implementing activity-based costing.
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- Indicate an advantage to implementing ABC for this scenario. Support your response.
- Indicate a disadvantage to implementing ABC for this scenario. Support your response.