A well-designed,activity-based cost system helps managers make better decisions because information derived from an ABC analysis:
A)is easy to analyse and interpret.
B)emphasises how managers can achieve higher sales.
C)can be used to eliminate non-value-added activities.
D)takes the choices and judgement challenges away from the managers.

Question

Quizplus · Accepted Answer

ABC analysis can identify non-value-added activities that can be eliminated, leading to cost savings and a more efficient use of resources. As a result, managers can make better decisions about resource allocation, process improvements, product and service pricing, and customer profitability analysis. While ABC analysis can be complex, the information derived from it can provide valuable insights for decision making. A and B are incorrect because ABC analysis can be time-consuming to interpret, and it focuses on cost management rather than sales generation. D is incorrect because managers still have to use their judgement and make choices based on the insights provided by ABC analysis.

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