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Even Though There Are No Inventories for Service Companies, ABC

question 83

Essay

Even though there are no inventories for service companies, ABC systems are of great use for service companies. Explain why and how.


Definitions:

Machining

The process of shaping, cutting, or altering a material using machines or tools, often used in the manufacturing of parts or components.

Activity-based Costing

Activity-based costing (ABC) is a method of assigning overhead and indirect costs to specific products or activities based on their usage.

Machining

The process of cutting, shaping, or removing material from a workpiece using machines or tools, often for manufacturing purposes.

Activity-based Costing

A costing method that assigns overhead and indirect costs to specific activities, providing more accurate product costing.

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