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    Activity Based Costing and Traditional Costing

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    When is it appropriate for companies to use activity-based costing? What are some differences between ABC and traditional costing?

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    ABC is appropriate for companies in following scenario:
    § Creates a variety of products and services
    § Has high overhead costs as compared to direct labor
    § An overabundance of data
    § Substantial non-product costs that can dramatically affect true product, distribution channel and customer profitability.

    How does this ABC differ from traditional costing systems?
    Activity-based costing is ...

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