What are three significant cost drivers that have been disregarded by traditional product costing system?


The significant cost drivers that have often been disregarded are:
Product variety--refers to the number of different types of products made.
Product complexity--refers to the number of components included in a product.
Process complexity--refers to the number of processes through which a product flows.

The above characteristics create overhead costs that can be seen as long-term variable costs; therefore they should be considered as cost drivers when implementing and applying ABC.

Business

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