Asked by shelby nickella on Jun 14, 2024
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When a company implements activity-based costing, manufacturing overhead cost is often shifted from low volume products to high volume products, with a higher unit cost resulting for the high volume products.
Manufacturing Overhead Cost
All indirect costs associated with the production process, including but not limited to utilities, maintenance, and factory equipment depreciation.
Low Volume Products
Products that are manufactured or sold in relatively small quantities compared to other products in the company's portfolio.
High Volume Products
Products that are produced or sold in large quantities, often benefiting from economies of scale.
- Identify the influence of ABC on product and overhead expenses, noting changes in the distribution of costs among products of varying volumes.
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Learning Objectives
- Identify the influence of ABC on product and overhead expenses, noting changes in the distribution of costs among products of varying volumes.
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