Activity Based Costing Concept and Model Discuss briefly the activity-based costing (ABC) concept and explain how ABC can differ from traditional costing approaches?
Consider a healthcare organization with which you are familiar that uses an ABC model.
Activity-based costing (ABC) is an accounting method that identifies and assigns costs to overhead activities and then assigns those costs to products.
An activity-based costing (ABC) system recognizes the relationship between costs, overhead activities, and manufactured products, and, through this relationship, it assigns indirect costs to products less arbitrarily than traditional methods. Some costs are difficult to assign through this method of cost accounting.
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