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    Activity-Based Costing (ABC) and Traditional Costing

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    How would you describe activity based costing? Also, can you explain why it might result in more accurate product costing information than the product cost derived under the traditional costing approach?

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    Under traditional costing method , the costs are allocated as per the volume or machine hours. On the other hand Activity-based costing (ABC) is a more accurate method of allocating indirect costs to specific products as ABC focuses on the cost driver. Hence ABC is a more appropriate method than traditional costing method as ...

    Solution Summary

    This solution discusses compares activity-based costing (ABC) to traditional costing and explains why ABC is superior.