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(www.valuebasedmanagement.net) Traditional information systems like functional based costing, report costs by functions (e.g. administration, manufacturing, and marketing). Functional based costing systems focus on specific functions of an organization while activity based costing operates on the premise that activities incur costs through the consumption of resources, while customer demand for products and services causes activities to be performed.
There are four steps that are used to determing the cost of goods and services using the activity based costing method. The first step is to identify and classify the activities that a company performs...
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