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In an activity-based costing system (ABC), the cost of each action with assets is assigned to all items and managements according to their actual utilization. Compared to standard costing, this model allocates more indirect costs (overhead) into direct costs. When assigning costs, activity-based cost accounting considers the activities involved and the assets consumed by these activities to give prices to specific items, managements, ventures, assignments, or acquisitions. This is a departure from traditional costing, which often assigns costs based on subjective assignment rates for overhead or the supposedly different costs. Because of complicated subjects included in the field of academics, students look for our Online Activity-Based Accounting Assignment Help .
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A product's price under the activity-based costing system must be fair and accurate to use the activity-based accounting method. The main reason for this is that the appropriate cost drivers distribute overheads. Administrative activities such as property tax, insurance, building depreciation, and maintenance costs fall under this category.
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