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Economic models must fully reflect reality.
Activity-Based Costing System
A costing methodology that assigns costs to products or services based on the activities required to produce them, considering the resources consumed by each activity.
Activity Cost
The cost associated with a specific activity or process, used in activity-based costing to more accurately allocate overhead costs to products or services based on the activities required to produce them.
Assembly
The process in manufacturing where various components or parts are put together to form a final product.
Product Diversity
The range of different products or services offered by a company, which can influence strategies in marketing, production, and inventory management.
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