Calculating capacity cost rates, Accounting Basics

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Calculating capacity cost rates

Questions:

1. Why is practical capacity recommended in calculating capacity cost rates?

2. Why might an organization not experience financial improvement even after using activity-based costing to identify and take action on promising opportunities for process improvements and cost reductions?

3. Why are service organizations often ideally suited for activity-based costing?

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Accounting Basics: Calculating capacity cost rates

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Accounting Basics: Calculating capacity cost rates

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