Which of the Following Companies Is Using Cost Drivers Effectively

question 101

Multiple Choice

Which of the following companies is using cost drivers effectively to manage value chain activities cost efficiently?

• A) Company A orders large amounts of supplies and keeps them stocked till customer demand rises to prevent falling behind schedule in meeting customer needs.
• B) Company B uses just-in-time inventories and produces made-to-order products as and when customer demand rises.
• C) Company C collects customer requests first and starts processing them only after reaching a certain number.
• D) Company D routes all its supplies to a warehouse for storage and then transports them to individual factories for processing.
• E) Company E substitutes lower-cost inputs with high-quality,high-cost inputs to gain customer attention and loyalty.

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Definitions:

Spot Exchange Rates

Refers to the current exchange rate at which a currency can be bought or sold for immediate delivery.

Foreign Currency

Currency used in a country other than one's own, necessitating exchange for local use.

Depreciates

Depreciates refers to the reduction in the value of an asset over time due to wear and tear, age, or obsolescence, typically reflected in accounting as a method to allocate the cost of an asset over its useful life.

Forward Contract

A customized contract between two parties to buy or sell an asset at a specified future date at a price agreed upon today.