Traditional cost management systems use production volume as the measure of activity. Modern systems might use which of the following as activity measures?
A) Number of batches
B) Number of customers
C) Number of product lines
D) All of the given answers

Question

Quizplus · Accepted Answer

Modern cost management systems use various measures of activity that are more closely related to the actual consumption of resources. Number of batches, number of customers, and number of product lines are all examples of activity measures that can provide more accurate cost information and support better decision-making. Using just production volume as a measure of activity may not capture the true cost drivers of a business and can lead to incorrect cost allocations and suboptimal decisions. Therefore, the best choice is all of the given answers.

Traditional Cost Management Systems Use Production Volume as the Measure