In an activity-based costing (ABC) system, cost reduction is accomplished by identifying and eliminating

a. All Cost Drivers

b. Non-value-Adding Activities

Question

Business

Angel Harrell

26 June, 08:46

In an activity-based costing (ABC) system, cost reduction is accomplished by identifying and eliminating

a. All Cost Drivers

b. Non-value-Adding Activities

+2

Answers (1)

Know the Answer?

Logan Bishop · Answer 1

b. Non-value-Adding Activities

Explanation:

As per the concept of Activity Based Costing System, all the costs are allocated to each product or department based on activity drivers.

Under this all the activities are found and cost drivers are allocated for each activity and on such basis proper cost allocation is done.

Under this further non value adding activities are identified and eliminated.

Cost drivers are not eliminated but cost are allocated based on such activities.

Therefore correct option is

b. Non-value-Adding Activities

In an activity-based costing (ABC) system, cost reduction is accomplished by identifying and eliminatinga. All Cost Driversb. Non-value-Adding Activities

In an activity-based costing (ABC) system, cost reduction is accomplished by identifying and eliminating

a. All Cost Drivers

b. Non-value-Adding Activities