Final answer:
A benefit of activity-based cost management is its ability to make it easy to identify the activities influencing cost. This system enhances cost understanding and aids in informed decision-making but is not necessarily inexpensive or solely based on machine hours.
Step-by-step explanation:
Out of the options provided, one of the benefits of an activity-based cost management system is b. It makes it easy to identify the overall activities that bear an influence on cost. This system allows businesses to better understand the costs associated with each activity involved in producing a product or service, thereby giving insight into which activities are the most costly and how they may affect pricing, profitability, or where cost efficiency improvements can be made.
While this system can potentially enhance strategic planning, saying it 'ensures allocation of all costs on the basis of machine hours' or that 'it is inexpensive' is not accurate. Instead, activity-based costing typically involves assigning costs to products and services based on the resources they consume, which could include machine hours among various other cost drivers.
Understanding different cost measures like fixed cost, marginal cost, average total cost, and average variable cost provides separate insights and is crucial for a firm's decision-making process, just as recognizing the activities that drive costs helps in making more informed decisions relevant to production technology selection and cost/benefit analysis.