Using Average Product Cost for a Value Stream Means That

question 20

Multiple Choice

Using average product cost for a value stream means that individual product costs are not known. This is adequate mainly because

• A)waste can be eliminated at the activity and process level without knowing product costs.
• B)a fully accurate product cost is not needed for many decisions.
• C)standard costing variances may actually impede improvement decisions.
• D)all of the above.

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Definitions:

Comparative Advantage

The ability of an individual or group to carry out a particular economic activity more efficiently than another activity.

Increasing Returns

A situation in economics where an increase in the amount of inputs leads to a greater proportional increase in the amount of output.

Factor Endowments

The amount of land, labor, capital, and entrepreneurship that a country possesses and can exploit for manufacturing and service provision.

Technology

The technical means for producing goods and services.