A reason that more organizations in manufacturing and nonmanufacturing industries are adopting activity-based costing systems is that new production techniques have decreased the proportion of indirect costs.

Question

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Activity-based costing systems are adopted by organizations in manufacturing and nonmanufacturing industries to accurately allocate indirect costs to products or services. The adoption of new production techniques may reduce the proportion of direct costs, but it does not necessarily reduce the proportion of indirect costs.

A Reason That More Organizations in Manufacturing and Nonmanufacturing Industries