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Activity Based Costing
Beginning of paper
In today's competitive economy, the cost structure is much more complex than that of the past, and 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 pursuin .... Middle of paper
.... lead to disaster. Conventional systems report inaccurate product costs--often grossly inaccurate. 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 cost ....
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Number of words: 820
Number of pages: 3 (approx. 250 words per double-spaced page)
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