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A cost that is traceable to a segment through activity-based costing is always an avoidable cost for decision making.
Traceable
Costs or items that can be directly linked or attributed to a specific product, job, or department, facilitating accurate costing and financial analysis.
Avoidable Cost
A cost that can be eliminated by choosing one alternative over another in a decision. This term is synonymous with differential cost and relevant cost.
Activity-Based Costing
An accounting method that assigns costs to products based on the activities involved in producing those products.
- Understand the fundamental principles of activity-based costing and its influence on cost analysis that is pertinent.
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Learning Objectives
- Understand the fundamental principles of activity-based costing and its influence on cost analysis that is pertinent.
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