Activity-based costing is used to evaluate a company's cost-competitiveness and:
A) determine whether the value chains of rival companies are similar or different.
B) benchmark the costs of primary value chain activities against the costs of the support value chain activities.
C) determine the costs of each primary and support activity comprising a company's value chain and thereby reveal the nature and makeup of a company's internal cost structure.
D) determine the costs of each strategic action a company initiates.
E) None of these.

Question

Quizplus · Accepted Answer

Activity-based costing helps to determine the costs of each primary and support activity comprising a company's value chain and thereby reveal the nature and makeup of a company's internal cost structure. This allows a company to identify areas of cost inefficiency and make changes to become more cost-competitive. It does not evaluate the value chains of rival companies, benchmark primary versus support activities, or determine the costs of strategic actions.

Activity-Based Costing Is Used to Evaluate a Company's Cost-Competitiveness And