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A basic assumption of activity-based costing (ABC) is that All manufacturing costs vary directly with units of production. Products or services require the performance of activities, and activities consume resources. Only variable costs are included in activity-cost pools. Only costs that respond to unit-level drivers are product costs..

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A basic assumption of activity-based costing (ABC) is that All manufacturing costs vary directly with units of production. Products or services require the performance of activities, and activities consume resources. Only variable costs are included in activity-cost pools. Only costs that respond to unit-level drivers are product costs.

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