CA Inter P4 · Chapter 5 · Question 7 of 8
Using ABC information to identify and eliminate non-value-added activities, so as to reduce cost without reducing value to the customer, is known as:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Activity based management
Explanation
Activity based management (ABM) uses activity cost information for cost reduction and process improvement, including eliminating or reducing non-value-added activities. Activity based budgeting uses activities and drivers to prepare budgets.
More Activity Based Costing MCQs
- Q1In activity based costing, the most appropriate cost driver for the purchasing activity is:
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- Q3Which of the following is an example of a facility-sustaining activity?
- Q4Total set-up costs are ₹2,40,000 for 120 set-ups during the period. Product M is produced in 18 set-ups and its output is 9,000 units. The…
- Q5A company identifies three activities: Machining ₹6,00,000 (driver: 30,000 machine hours), Set-ups ₹1,50,000 (driver: 60 set-ups) and…