Discussion – The answer should not be too long

Rick White has recently discussed the intent to diversify Swiss Chocolate’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 year’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.

• Indicate an advantage to implementing ABC for this scenario. Support your response.
• Indicate a disadvantage to implementing ABC for this scenario. Support your response.