Use of Activity-Based Costing and Activity-Based Management Requires

question 137

Multiple Choice

Use of activity-based costing and activity-based management requires

• A)the creation of an environment for change in an organization.
• B)elimination of all non-value-added activities in an organization.
• C)that company processes be automated and the use of direct labor be minimal.
• D)each process be fully mapped and all activities be identified as value-added or non-value-added.

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Definitions:

Output

The amount of goods or services produced by a person, machine, factory, or company within a certain period.

Demand Schedule

A diagram indicating the volume of goods or services that consumers can and will buy at assorted prices.

Marginal Cost

The investment needed to make an extra unit of a good or service.

Average Cost

A measure of the total cost of production divided by the number of units produced, used to calculate the cost per unit.