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

Question

Quizplus · Accepted Answer

Activity-based cost systems provide detailed information on the costs of individual activities, allowing managers to identify and eliminate nonvalue-added activities. This makes it easier for managers to make better decisions and allocate resources more effectively. Option B is incorrect because while ABC provides more detailed information, it may not necessarily be easy to analyze and interpret. Option C is incorrect because ABC analysis still requires judgment by managers to make decisions based on the information provided. Option D is incorrect because ABC analysis does not emphasize achieving higher sales but rather reducing costs and improving efficiency.

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