How is activity-based management related to activity-based costing?
A)Activity based management is another term for activity based costing.
B)Activity based management is used when activity based costing is not feasible.
C)Activity based management bases improvements to operations and reductions in costs on activity based costing data.
D)Activity based management is not related to activity based costing.

Question

Quizplus · Accepted Answer

Activity based management refers to using the insights gained from activity based costing to make improvements and reduce costs in operations. In other words, activity based management bases its decisions on the data generated by activity based costing. Therefore, C is the correct answer. A is incorrect because activity-based management and activity-based costing are not interchangeable terms. B is incorrect because activity-based costing is usually considered the first step towards activity-based management. D is incorrect because the two concepts are related.

How Is Activity-Based Management Related to Activity-Based Costing