Question

In an activity-based management system, one is NOT likely to find

a. tracing of costs to activities
b. only unit-based drivers
c. broad flexible product costing
d. systemwide performance maximization

Answer 1

In an activity-based management system, unit-based drivers are not likely to be found. Instead, ABM uses various types of drivers and considers a more comprehensive set of cost drivers for accurate cost measurement. ABM also incorporates broad flexible product costing and systemwide performance maximization.

Step-by-step explanation:

In an activity-based management system, one is NOT likely to find only unit-based drivers. Activity-based management (ABM) focuses on tracing costs to activities to gain a better understanding of resource consumption and costs. ABM uses various types of drivers, such as time drivers, transaction drivers, and volume drivers, to allocate costs to activities. Instead of relying solely on unit-based drivers, ABM considers a more comprehensive set of cost drivers to provide a more accurate measurement of costs.

Broad flexible product costing is another key feature of an activity-based management system. This approach takes into account various cost drivers and allocates costs based on the activities required to produce a product or service. This allows for a more accurate calculation of product costs, considering factors such as setup costs, material handling costs, and machine processing costs.

Systemwide performance maximization is also an important aspect of an activity-based management system. By analyzing activities and their costs, ABM can identify opportunities for performance improvement and cost reduction throughout the entire system, rather than focusing only on individual activities.

Answer 2

In an activity-based management system, one is not likely to find only unit-based drivers, as the system uses a variety of drivers for accurate cost allocation, supporting broad product costing and systemwide performance.

Step-by-step explanation:

In an activity-based management system, one is NOT likely to find only unit-based drivers. This system involves identifying activities within an organization and assigning the cost of each of these activities to all products and services according to the actual consumption by each. This approach not only uses unit-based drivers but also transaction-based drivers, duration-based drivers, and intensity-based drivers to trace the costs more accurately to the activities. Therefore, the claim of using only unit-based drivers is incorrect. Instead, an activity-based management system aims for broad flexible product costing and systemwide performance maximization by more accurately tracing of costs to activities.