Activity-Based Costing: Multiple Lot Size Effect
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Keywords
activity-based costing, ABC, volume-based cost accounting, lot sizing method
Abstract
This paper illustrates how overhead cost allocations may vary between traditional volume-based cost accounting and ABC. The illustration is then expended to show how product costs determined by ABC can also vary depending upon the lot sizing method. The illustration is then used to explain how a costing table can be utilized to obtain accurate per unit costs when a product is produced in multiple lot sizes.
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