Question
Asked Jan 21, 2020
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Companies can choose from different costing methods: process/product costing and activity-based costing. Think about a company. How could the costs differ if one method is chosen over the other?

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Expert Answer

Step 1

Process costing: Process costing is used when there is a continuous manufacturing process. The direct and indirect cost incurred are traced, accumulated and allocated to the products produced in manufacturing process in a period. In the process costing average cost per unit is computed for produced units.

Step 2

Activity based costing: It is a method for allocating overhead cost to products based on consumption of activity in production. Overhead rate for allocating cost is computed by dividi...

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Business

Accounting

Cost Management

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