Activity-based costing focuses on a single predetermined overhead rate for cost analysis.

Question

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Activity-based costing (ABC) uses multiple predetermined overhead rates for cost analysis. ABC recognizes that different activities or cost drivers contribute to overhead costs in varying degrees, and therefore assigns overhead costs based on the level of activity for each cost driver. This allows for a more accurate allocation of costs to products or services.

Activity-Based Costing Focuses on a Single Predetermined Overhead Rate for Cost