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Google generates much of its revenue by providing online advertising. It is said that: “Activity -based...

Google generates much of its revenue by providing online advertising. It is said that: “Activity -based -costing is only useful for manufacturing companies? Is this a true statement?

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Answer #1

It is not a true statement.

ABC system is suitable to service industry also.

In the case of google, much of its revenue comes from online advertising, which is customer specific. Each customer has different requirement as to creation of the advertising programme, maintaining and displaying it. As these consume resources differently, activity based costing would be appropriate and essential.

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