In activity-based costing, unit product costs computed for external financial reports include manufacturing overhead costs that are computed by multiplying activity rates by the activities required to produce a product.

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In activity-based costing, unit product costs are computed by assigning overhead costs to individual products based on the activities required to produce them. Activity rates are multiplied by the number of units of each activity used to produce a product, and this results in the overhead cost to be assigned to the product. These costs are included in the unit product cost for external financial reports.

In Activity-Based Costing, Unit Product Costs Computed for External Financial