If a Company's Production Process Is Not Aligned with the Volume

question 25

Multiple Choice

If a company's production process is not aligned with the volume and variety demanded of the product,then ______.

• A)the company has made a bad decision with regard to choice of process
• B)the company needs to stop production
• C)the company needs to find a new market for its product
• D)the company needs to offshore its production

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Definitions:

Activity-Based Costing

A method of costing that assigns costs to products or services based on the activities they require.

Activity Rate

The measure used to allocate costs to activities based on their use of resources.

Activity Cost Pool

A grouping of all the costs related to a particular activity, used in activity-based costing to more accurately allocate costs to products or services.

Activity-Based Costing

A costing method that allocates overhead costs to specific activities, providing more accurate costs of producing specific products or services.