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:

Inferior Good

An inferior good is a type of good for which demand decreases as the income of the individual increases, in contrast to a normal good.

Rental Housing

Properties available for rent to provide accommodation, usually on a monthly or yearly lease agreement.

Price-Consumption Curve

A curve in economics that shows the changes in an individual's consumption of two goods as the price of one good changes, holding the individual's utility level constant.

Engel Curve

A graphical representation showing how household spending on a particular good or service changes with income.