Activity-based costing is a method of allocating overhead costs to products.

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Activity-based costing (ABC) is a method of allocating overhead costs to products based on the activities that are required to produce the product. This method is different from traditional costing methods that allocate overhead costs based on a single predetermined overhead rate. ABC recognizes that different products may consume overhead costs differently and allocates costs based on the actual activities that are required to produce each product.

Activity-Based Costing Is a Method of Allocating Overhead Costs to Products