activity based costing technique is most suitable for Mal ltd as Mal ltd has different factors of production or Mal Ltd uses different resources in its production of flower. These resources contribute in production at different level or in different manner. Management of Mal ltd needs to identify different cost drivers that support production process or administration of business. Since Mal ltd does not has defined or idle organization structure therefore activity based costing can be easily adopted.
Since Mal ltd has specified staff for specific operations therefore cost can be directly assigned to that particular product only where staff is assigned. Part time employees hired during peak season can be charged to those products which are manufactured during peak season. Under activity based costing direct cost are directly charged and indirect cost shall be charged to different cost drivers or resources . Activity based costing is suitable for Mal ltd as compared to other costing techniques because it is based on product costing and Mal ltd’s business is affected by season.