In Activity-Based Costing, Organization-Sustaining Costs Should Not Be Included in Product

question 67

True/False

In activity-based costing, organization-sustaining costs should not be included in product costs for internal management reports that are used for decision-making. However, companies frequently include organization-sustaining costs in product costs to satisfy external reporting requirements.

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Definitions:

Industrial Cluster

A geographic concentration of interconnected businesses, suppliers, and associated institutions in a particular field, which can drive innovation and productivity.

Silicon Valley

A region in Northern California known for its significant number of innovative tech companies and startups.

Software Makers

Individuals or companies that develop, create, and sometimes distribute software applications or systems, contributing to the technology and information sectors.

Industrial Policy

Industrial policy encompasses strategies and policies employed by a government to stimulate or regulate different sectors of its economy, aiming at enhancing competitiveness and economic growth.