Under activity based management,cost management is achieved by:
A)managing the underlying activities.
B)reducing production volume.
C)eliminating value-added activities.
D)assigning indirect costs to products based on their activities.

Question

Quizplus · Accepted Answer

Under activity based management, cost management is achieved by managing the underlying activities. This involves identifying activities that add value to the product or service, optimizing those activities, and eliminating or reducing non-value adding activities. By managing the activities effectively, the costs associated with those activities can be minimized, resulting in overall cost savings for the organization. Reducing production volume (B) may be a short-term strategy for cost reduction, but it is not sustainable in the long run. Eliminating value-added activities (C) is not a viable option as it would compromise the quality of the product or service. Assigning indirect costs to products based on their activities (D) is a part of activity based costing, which is a method used in activity based management, but it alone does not achieve cost management.

Under Activity Based Management,cost Management Is Achieved By