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In a retail chain, ABC Stores, there are two departments: Clothing and Electronics. The Clothing department incurs $500,000 in overhead costs, while the Electronics department
In a retail chain, ABC Stores, there are two departments: Clothing and Electronics. The Clothing department incurs $500,000 in overhead costs, while the Electronics department incurs $700,000. Explain how traditional costing and activity-based costing (ABC) allocate these overhead costs to each department. Compare the advantages and disadvantages of each method in accurately representing costs and supporting decision-making.
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