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Unformatted text preview: Activity-based costing (ABC) is the process of accumulating manufacturing overhead costs by production support activity and then applying manufacturing overhead to production based on the activity required for each job or product. An ABC system involves identifying the activity that causes the incurrence of a cost; this activity id known as a cost driver. Cost distortion is a shift in the relative amount of manufacturing overhead costs applied to the mix of products produced that occurs because a single cost driver application rate is used instead of activity-based costing rates. Activity-based management (ABM) is the use of activity-based costing information to support the decision-making process....
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This note was uploaded on 03/02/2011 for the course ACCT 502 taught by Professor Jaggi during the Fall '10 term at Rutgers.
- Fall '10