Valery Murphy is a division manager for a large computer manufacturing company. It has been determined that Murphy's division has operating costs that are 50 percent greater than similar divisions of competitor organizations. To reduce the waste in her division, Murphy decides to install a system that focuses on identifying specific cost centers in an organization. This type of system is frequently referred to as __________.
A) profit-center marketing
B) activity-based costing
C) performance-related analysis
D) waste-reduction controls

Question

Quizplus · Accepted Answer

Activity-based costing (ABC) is a system that focuses on identifying specific cost centers and allocating costs to those centers based on the activities that drive those costs. This approach helps organizations understand where costs are coming from and identify areas for improvement, which is what Valery Murphy is aiming to do in her division.

Valery Murphy Is a Division Manager for a Large Computer