How is activity-based costing useful for pricing decisions? Question content area bottom Part 1 ...
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Accounting
How is activity-based costing useful for pricing decisions?
Question content area bottom
Part 1
A.
Activity-based costing gives managers more accurate product-cost information for making pricing decisions. It also helps managers to manage costs during value engineering by identifying the cost impact of eliminating, reducing, or changing various activities.
B.
Because of activity-based costing, companies are aware of the actions of their competitors.
C.
Activity-based costing influences prices because costs affect supply. The lower the cost of producing a product, the greater the quantity of product the company is willing to supply.
D.
Activity-based costing helps customers influence price through their effect on the demand for a product or service. Companies must always examine pricing decisions through the eyes of their customers and then manage costs to earn a profit.
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