Financial statements of a manufacturing firm the following events took place for sorensen manufacturing company during january, the first month of its operations as a producer of digital video monitors: purchased $259,000 of materials. used $186,480 of direct materials in production. incurred $466,200 of direct labor wages. incurred $186,500 of factory overhead. transferred $787,400 of work in process to finished goods. sold goods for $1,243,200. sold goods with a cost of $699,300. incurred $222,700 of selling expense. incurred $129,500 of administrative expense.

Activity-based costing (abc) is not truly a cost collection mechanism as much as it is an inventory valuation method. the main purpose for implementing an activity-based cost system is to try to overcome some of the cost distortions that occur in traditional costing from product differences when there are variations in size and complexity. however, one of the disadvantages of utilizing abc is that the additional information gathering necessary to implement costing with that level of detail might be beyond the reach of some companies with resource or financial constraints. with this in mind, what kinds of industries or companies do you think would benefit most from using activity-based costing and why? in designing or modifying an accounting system to capture appropriate costs for abc, what considerations do you think would need to be made?