Definition of activities based costing, Managerial Accounting

Definition of Activities based costing

Activity based costing is a system that focuses on activities as the fundamental cost objects and uses the costs of these activities as building blocks for compiling the cost of other objects.

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Cost attribution to cost units on the basis of benefits received from indirect activities I e. ordering setting up assuring quality etc. activity based costing is only a generic approach and it can a aprt of both order costing system or a process costing system.

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