ACC 310 W5 - Final .

Activity Based Costing

“Activity-based costing (ABC) is a two-stage product costing method that assigns costs first to activities and then to the products based on each product’s use of activities. An activity is any discrete task that an organization undertakes to make or deliver a product or service. Activity-based costing is based on the concept that products consume activities and activities consume resources” (Lanen, 2011).  ABC was meant for problem solving stemming from problems from a traditional cost accounting process.  There are several steps in developing an Activity-Based Costing system and this system allows for a most accurate way of attributing costs to activities and products. 
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