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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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Striving to produce the same activity output with lower costs for the input used is concerned with which of the following dimensions of activity performance?

  1. a. Quality
  2. b. Time
  3. c. Activity sharing
  4. d. Effectiveness
  5. e. Efficiency

To determine

Identify the option which describes the dimension of activity performance that is concerned with producing the same activity output with lower costs for input.

Explanation

ABC Costing:

In activity based costing, overhead costs are allocated to various departments based on the respective cost driver. ABC costing provides a more accurate allocation than using a threshold rate. For example, using labor hours for allocating ordering costs would not be appropriate, rather number of orders should be used to allocate the cost.

e.

Efficiency is referred as achieving maximum activity outputs with the given level of input. This is done by eliminating wastage and optimum utilization of inputs. Therefore, this is the correct option.

a.

Quality refers to performing activities correctly in the first time. This reduces requirement of re-performance and thus reduces unnecessary costs. Quality is not concerned with reduction of inputs or maximizing outputs...

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