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Activity-Based-Costing (ABC)charges Products for the Cost of Capacity Used,NOT for Idle

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Essay

Activity-based-costing (ABC)charges products for the cost of capacity used,NOT for idle capacity.
Required:
a)The use of which activity level,budgeted (same as expected)or maximum capacity,is consistent with ABC? Explain.
b)How might the use of ABC based on maximum capacity activity level enhance a firm's ability to compete on price? Explain.


Definitions:

Psychological Capital

An individual's positive psychological state, characterized by self-efficacy, optimism, hope, and resilience, which contributes to performance and success.

Positive Work-Related State

A condition wherein employees feel motivated, satisfied, and engage productively.

Workers Engaged

Refers to employees who are actively involved, enthusiastic, and committed to their work.

Absenteeism

The habitual non-presence of an employee at their job, which can be due to various reasons including illness, personal matters, or disengagement with work.

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