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What Is Meant by the Term "Activity" in Activity-Based Costing

question 18

Essay

What is meant by the term "activity" in activity-based costing (ABC)? How are costs allocated in ABC?


Definitions:

Marginal Revenue

The additional income that is generated from selling one more unit of a good or service.

Marginal Cost

The financial outlay for producing a subsequent unit of a product or service.

Market Price

The prevailing market rate at which a service or asset can be purchased or sold, influenced by the balance of supply and demand.

Marginal Cost

The additional cost incurred from producing one more unit.

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