Disadvantages and Criticisms of ABC

a) Some arbitrary cost apportionment may still be required for cost like rent, rates and building depreciation.
b) Single cost driver may not explain the cost behavior of all items in its associated pool.
c) Every cost may not have an identifiable cost driver like what drivers the cost of annual external audit?
d) ABC is sometimes introduced because it is fashionable, not because it will be used by management to provide meaningful product costs or extra information. If management is not going to use ABC information, an absorption costing system may be simpler to operate.
e) The cost of implementing and maintaining an ABC system can exceed the benefits of improved accuracy.
f) Implementing ABC may be problematic. Recent journal articles have highlighted issues like incorrect belief that ABC can solve all an organization's problems and difficulty in determining appropriate cost drivers.
g) ABC is relatively new technique and as such management are not familiar with it’s principles and methods and as such may be reluctant to introduce the system. A recent survey commissioned by ACCA showed that only 4% of firms had actually adopted ABC costing system.