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    Activity-Based Costing and Activity Based Management

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    What is the purpose of activity-based costing (ABC)? What companies would benefit from an ABC? How does ABC interact with activity based management (ABM)? How can ABC and ABM benefit a service company?

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    Activity-Based Costing and Activity Based Management
    What is the purpose of activity-based costing (ABC)? What companies would benefit from an ABC? How does ABC interact with activity based management (ABM)? How can ABC and ABM benefit a service company?

    Activity based costing allocates the cost to the cost driver on the basis of activity rate. ABC method and to compute a cost driver rate. It involves following steps:
    1) Assign costs to pools according to activities that cause costs to be incurred.
    2) Allocate costs in the activity pools to products.
    Where the Formulae for Cost driver rate=
    = (Total overhead costs of activity)/ Activity volume
    3. Assign Activity Costs to Products

    Purpose of ABC
    ABC assigns costs to products by ...

    Solution Summary

    Response discusses the Activity-Based Costing and Activity Based Management

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