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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Explain how ABC can help a firm identify its true low-cost suppliers.

To determine

Discuss how ABC helps in identifying low-cost suppliers.

Explanation

Activity-Based Supplier Costing:

An activity-based supplier costing helps in tracing the activity cost which is related to the suppliers.

An activity-based supplier costing helps the management to identify the actual cost of the firm’s supplier. The supplier’s cost is much higher than the cost incurred on the component’s acquisition. The suppliers can also influence internal activities of the firm which is a reason for increased supplier cost...

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