Using average product cost for a value stream means that individual product costs are not known.Why is this adequate?
A)Waste cannot be eliminated at the activity and process level.
B)A fully accurate product cost is not needed for many decisions.
C)Budget costing variances may actually impede improvement decisions.
D)Detailed variances by department are not needed to eliminate waste.

Question

Quizplus · Accepted Answer

While a fully accurate product cost may be desired, it is not always necessary for making decisions that can improve the value stream. Using average product cost provides a reasonable estimate of costs and can help identify areas for improvement. Additionally, focusing too much on detailed variances may actually impede improvement decisions as it can lead to analysis paralysis and detract from the overall goal of eliminating waste.

Using Average Product Cost for a Value Stream Means That