A Major Advantage in Changing from a Traditionally Based Costing

question 33

Multiple Choice

A major advantage in changing from a traditionally based costing system to an activity-based costing system is

• A)a company's customers can benefit from any reduction in costs.
• B)management will be able to identify the true cost of non-added-value activities.
• C)direct labour and material costs will be reduced.
• D)supplier costs will be reduced after the changeover.

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Definitions:

Efficiency

The ability to accomplish a task or goal using the least amount of resources or time, often measured in terms of output per unit of input.

Competitive Strategy

Refers to a long-term plan formulated by a company to gain a competitive advantage over its rivals in the industry.

Organization Structure

The arrangement of departments, roles, and responsibilities within a company, defining how activities are directed to achieve goals.

Determinants of Performance

Factors or elements that significantly influence the output, efficiency, or effectiveness of individuals, teams, or organizations.