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ABC recognizes the actual nature of cost comportment and supports in decreasing costs and classifying actions which do not enhance worth to the product. The managers with the adoption of ABC are in a better position to regulate many fixed overhead costs. This is being done by putting a better control over the actions which actually cause these fixed overhead costs (" Advantages and Demerits of Activity Based Costing (ABC)", 2019).
ABC helps the organization to bring correctness and consistency in determining the various costs related to the product. It helps to understand that the cost is caused due to activities and not products. ABC helps to deliver more accurate product costs.
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