Traditional Costing Systems

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Definitions
Activity-Based Costing (ABC)
Activity-Based Costing Cost Allocation Management Accounting Cost Drivers Cost Pools Traditional Costing Systems Cause-and-Effect Allocations Absorption Costing
Activity-Based Costing (ABC) is an accounting method of cost allocation that assigns costs to products and services based on the activities and resources that they consume.
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Definitions
Cause-and-Effect Allocation
Cause-and-Effect Allocation Cost Allocation Allocation Base Indirect Costs Cost Objects Traditional Costing Systems Activity-Based Costing
Cause-and-effect allocation is a cost allocation method where the allocation base is a significant determinant of the cost. This method ensures accurate assignment of indirect costs to cost objects.
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Definitions
Cost Allocation
Cost Allocation Cost Objects Indirect Costs Allocation Base Cost Driver Traditional Costing Systems Activity-Based Costing
Cost allocation is the process of assigning indirect costs to specific cost objects in a way that reflects resource consumption. This is crucial for making informed decisions, setting prices, and measuring profitability.
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