Why Are More and More Organizations in Both Manufacturing and Nonmanufacturing

question 188

Essay

Why are more and more organizations in both manufacturing and nonmanufacturing industries adopting activity- based costing systems?

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Definitions:

Overhead

All indirect costs of running a business that cannot be directly attributed to a specific product or service.

Equipment Breakdown

The failure or malfunction of machinery or equipment, interrupting regular operations.

On-costs

Additional costs beyond basic salaries that include items like payroll taxes, superannuation, and workers' compensation.

Direct Labour

The wages paid to workers directly involved in producing goods or providing services.