Allen Crabb Corporation had the following activities, traceable costs, and physical flow of driver units:
The above activities are used by departments X and Y as follows:

-A cost-management system
A) first measures the resources used by each department.
B) assesses the effects of changes in costs on the departments.
C) identifies how management's decisions affect costs.
D) distinguishes between product costs and period costs.

Question

Allen Crabb Corporation had the following activities, traceable costs, and physical flow of driver units:
  The above activities are used by departments X and Y as follows:
 
-A cost-management system
A) first measures the resources used by each department. 
B) assesses the effects of changes in costs on the departments. 
C) identifies how management's decisions affect costs. 
D) distinguishes between product costs and period costs.

Quizplus · Accepted Answer

A cost-management system is designed to identify how management's decisions affect costs. It examines the relationship between a company's activities, the costs incurred by those activities, and the effects of those costs on the company's profitability. The system helps managers identify where costs can be reduced or eliminated and how those changes will affect the company's overall bottom line. Option A is incorrect because measuring the resources used by each department is just one aspect of a cost-management system. Option B is incorrect because while assessing the effects of changes in costs on the departments is important, it is not the primary purpose of a cost-management system. Option D is incorrect because distinguishing between product costs and period costs is just one part of a cost-management system.

Allen Crabb Corporation Had the Following Activities, Traceable Costs, and Physical