Explain how to find the variable cost and ABC cost.
In economics and business, cost refers to the amount paid by a company for various resources. The cost is an important measure for understanding how a business performs, and there are different ways of calculating it.
Answer and Explanation:
The variable cost is found by looking only at the direct costs attributable to a product. For example, if a product costs $3 to produce, in addition to $500 of fixed costs, only the $3 is registered for the variable cost. Activity Based Costing (ABC) requires also adding in the fixed costs that go into the product. As such, ABC cost also has to add the $500 fixed cost.
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from Financial Accounting: Help and ReviewChapter 13 / Lesson 5