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What Is the Typical Effect on the Numbers of Cost

question 50

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What is the typical effect on the numbers of cost pools and cost assignment bases when an activity-based costing (ABC) system replaces a traditional costing system? (CPA adapted)


Definitions:

Marginal Benefit

The heightened pleasure or utility a person obtains from the additional consumption of a unit of a good or service.

Gadgets Production

The process of creating and manufacturing devices, often electronic, that are designed to perform a particular function or task.

Marginal Cost

The cost incurred by producing one additional unit of a good or service.

Sunk Cost

A cost that has already been incurred and is not recoverable.

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