Answer
Benefits:
Encourages continuous improvement.
Reflects changing cost-driver rates over time.
Limitations:
Requires accurate forecasting of cost-driver rate changes.
May not work well for activities with significant variations.
Overcoming Limitations:
Improve forecasting accuracy by analyzing historical data.
Monitor actual costs closely and adjust the budget as needed.
Work Step by Step
Benefits:
Encourages continuous improvement.
Reflects changing cost-driver rates over time.
Limitations:
Requires accurate forecasting of cost-driver rate changes.
May not work well for activities with significant variations.
Overcoming Limitations:
Improve forecasting accuracy by analyzing historical data.
Monitor actual costs closely and adjust the budget as needed.
