Activity-based costing:

Activity-based costing:

a. assumes that the cost of a product is equal to the sum of the costs of all activities performed to manufacture it.

b. has become more widespread as overhead costs have been decreasing relative to materials and labor costs.

c. is similar to a conventional cost accounting system in accounting for direct labor and manufacturing overhead but differs in regard to direct materials.

d. uses a single unit-level basis to allocate overhead costs to products.

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