Which of the Following Should a Manager Using Activity-Based Management

question 118

Multiple Choice

Which of the following should a manager using activity-based management attempt to reduce or eliminate?

• A)Customer service in the warranty department
• B)Sales team to respond to customer needs
• C)Insurance division to process liability insurance payments
• D)Professional development workshop for managers to improve customer service

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Definitions:

Volume Of Activity

A measure of the total amount of work performed or output produced in a specific period.

Margin Of Safety

Margin of safety is the difference between actual or projected sales and the sales level at which the business breaks even.

Contribution Margin

The amount by which a product's selling price exceeds its total variable costs, indicating how much contributes to covering fixed costs and generating profit.

Pretax Income

Earnings of a company before any tax is applied, calculated by deducting all operating expenses, including cost of goods sold and interest, from revenues.