Adsorption and dissociation of hydrocarbons on metallic surfaces represent crucial steps on the path to carburization, eventually leading to dusting corrosion. While adsorption of CO molecules on Fe surface is a barrier-less exothermic process, this is not the case for the dissociation of CO into C and O adatoms and the diffusion of C beneath the surface, that are found to be associated with large energy barriers. In practice, these barriers can be affected by numerous factors that combine to favour the CO-Fe reaction such as the abundance of CO and other hydrocarbons as well as the presence of structural defects. From a numerical point of view, studying these factors is challenging and a step-by-step approach is necessary to assess, in particular, the influence of the finite box size on the reaction parameters for adsorption and dissociation of CO on metal surfaces. Here, we use density functional theory (DFT) total energy calculations with the climbing-image nudged elastic band (CI-NEB) method to estimate the adsorption energies and dissociation barriers for different CO coverages with surface supercells of different sizes. We further compute the effect of periodic boundary condition for DFT calculations and find that the contribution from van der Waals interaction in the computation of adsorption parameters is important as they contribute to correcting the finite-size error in small systems. The dissociation process involves carbon insertion into the Fe surface causing a lattice deformation that requires a larger surface system for unrestricted relaxation. We show that, in the larger surface systems associated with dilute CO-coverages, Cinsertion is energetically more favourable, leading to a significant decrease in the dissociation barrier. This observation suggests that a large surface system with dilute coverage is necessary for all similar metal-hydrocarbon reactions in order to study their fundamental electronic mechanisms, as an isolated phenomenon, free from finite-size effects.