Final answer:
The limitation of activity-based costing that does not apply is 'It is not suitable for small businesses'. ABC can be time-consuming and expensive, and it requires expertise, but whether it is suitable for small businesses depends on specific business needs and circumstances.
Step-by-step explanation:
The student has asked about an exception to the limitations of activity-based costing (ABC). Each of the following is a limitation of activity-based costing except It is not suitable for small businesses. The limitations of ABC typically include that it can be time-consuming and expensive to implement, it may not accurately allocate costs to products or services, and it requires a high level of expertise to implement and maintain. However, saying that ABC is not suitable for small businesses is not an intrinsic limitation of the method. While smaller businesses may find it challenging to support the costs and expertise associated with ABC, the suitability can vary based on the individual circumstances of each business.
Lessons from alternative measures of costs illustrate the value of understanding various cost components, such as fixed costs, marginal costs, average total costs, and average variable costs. These insights can guide firms in making decisions about their operations and cost structures. This approach is essential for businesses of various sizes, from internet companies with high fixed costs and low marginal costs to local service providers with low fixed costs and potentially high marginal costs, based on the scale and frequency of their services. Implementation of cost accounting systems depends not just on the size of the company but on the industry pattern of costs, the firm's specific cost structure, and long-term business goals.