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Activity Based Costing
Part 1 of Paper
....there is a lot less room for error than that allowed in the more laid back economy of the past. Today's costing concerns arise from the growing disparity between direct and indirect product costs. American manufacturers have been pursuing a steady stream of manufacturing methods and technologies. The goal was simpl.... Part 2 of Paper
....ate. Management, in turn, makes strategic decisions based on these inaccurate product costs.
Traditional cost systems assume all overhead activities are consumed equally by all products relative to volume produced. Further, all costs are allocated to products because the system assumes that current output drives current overhead costs. Overhead costs are allocated to products on the basis of the product's demand for some volume variable direct cost, usually labor hours, machine hours, or mate.... |
| Number of words: 820 - Approximate pages: 3 |
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