Competition places an increased emphasis on cost reductions.For an organization to reduce costs it must focus on
A)maximizing the cost allocation system.
B)reporting non-value added costs separately from value-added costs.
C)efficiently managing the use of the cost drivers in those value-added activities.
D)the cost allocation process.
E)reducing the number of cost drivers.

Question

Quizplus · Accepted Answer

Efficiently managing the use of cost drivers in value-added activities is the best choice as it directly reduces the costs associated with those activities. Maximizing the cost allocation system may not necessarily lead to cost reductions, and reporting non-value added costs separately from value-added costs may not result in significant savings. The cost allocation process and reducing the number of cost drivers can be important, but they are not as directly tied to cost reductions as efficiently managing the use of cost drivers.

Competition Places an Increased Emphasis on Cost Reductions