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Explain Activities uses through activities based costing
In order to correctly associate costs with products and services. ABC assigns cost to activities based on their use of resources. It then assign cost to cost objects such as products or customers based on their use of activities. ABC can track the flow of activities in organization through for core areas:
1) Cost object
2) Activities
3) Cost pool
4) Cost drivers
Illustration: ABC analysis Combine items on the basis of their relative value to form three categories—A, B and C. The data in the table below illustrates the ABC analysis.
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