In addition to each process having unique fixed costs, each process also has unique variable costs. In other words, the processing cost per unit is different for each process. Process variation is a part of manufacturing. No two parts are identical when processes and materials contain variation. Depending on the process, the level of quality can be Fair, Good, or Excellent. Furthermore, some processes have a higher rate of achieving certain quality levels.

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ABC costing assigns a proportion of overhead costs on the basis of the activities under the presumption that the activities drive the overhead costs As such ABC costing converts the indirect costs int... View the full answer