Question

In deciding whether to implement an activity-based cost management system, a manager must assess the trade-off between the cost of measurement and the cost of errors.

a)True
b)False

Answer 1

In deciding whether to implement an activity-based cost management system, a manager must assess the trade-off between the cost of measurement and the cost of errors. This statement is true.

Step-by-step explanation:

In deciding whether to implement an activity-based cost management system, a manager must assess the trade-off between the cost of measurement and the cost of errors. This statement is true.

Activity-based cost management systems are designed to allocate costs more accurately by tracing costs to specific activities or processes. While these systems can provide more detailed information, they require additional measurement and data collection efforts, which can be costly. On the other hand, if a company relies on inaccurate cost information, it may lead to incorrect decisions and costly errors.