A Well-Designed, Activity-Based Cost System Helps Managers Make Better Decisions

question 94

Multiple Choice

A well-designed, activity-based cost system helps managers make better decisions because information derived from an ABC analysis ________.

• A) can be used to eliminate nonvalue-added activities
• B) is easy to analyze and interpret
• C) takes the choices and judgment challenges away from the managers
• D) emphasizes how managers can achieve higher sales

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Definitions:

Noncooperative Behavior

Actions by firms that ignore the effects of those actions on the profits of other firms.

Marginal Costs

The cost incurred by producing one additional unit of a product.

Industry Output

The total product or service produced by companies within a specific sector or industry.

Noncooperative Behavior

Actions in a competitive environment where entities act independently without collaboration, potentially leading to less optimal outcomes.