accounting help

please see atached. One question only. Please provide original explanation. Cite any references using APA format. NO word minimum.

1)

Do you feel that many companies are starting to use ABA now because technology has improved the software that handles it? I can see how important it can be for complex, large companies.

Activity based costing (ABA) Notes from text

This type of costing method has grown in popularity over the years and is believed to be a more accurate way to cost a product in many situations.  By having accurate costs, a company can better plan their strategy going forward.

Under traditional costing, manufacturing overhead was assigned using usually one type of activity such as direct labor hours, machine hours, or direct labor costs. Under ABC costing, numerous cost pools are used and each pool will have its own measure of activity in order to get the assigned rate.

An example of a cost pool could be purchasing costs and an activity measure could be number of purchase orders.

Under ABC, we define five different levels of activities as follows:

1. Unit-level activities – These activities occur each time a unit is produced so direct labor would be an example of this.

2. Batch-level activities – These activities happen each time a group or batch is processed.  A machine setup is one of the most common examples of this because it won’t matter how many units pass through, we just set up 1 time per process.

3. Product-level activities – These activities are unique to the specific product.  Research and development would be an example of this.

4. Customer-level activities – These activities are customer driven and relate to specific customers in helping keep the customer satisfied and interested in our products.

5. Organization-sustaining activities – These activities are done regardless of the number of products or customers a company has.  The janitor cleaning the building would be an example of this.