Question 1
It is important that the product costs reflect as much of the diversity and complexity of the manufacturing process so that ________.
◦ total costs reflect market price
◦ value-added costs can be eliminated
◦ there is high likelihood of cross-subsidizing of product costs
◦ product-pricing errors are minimal
Question 2
Lavender Company is a logistics company and has recently implemented ABC system. Using activity-based information, it decides to reduce the bulkiness of the packages delivered, thereby reducing costs. This suggests that ABC system helps managers in ________ decisions.
◦ pricing
◦ product-mix
◦ process-improvement
◦ product-design