The process of identifying appropriate cost drivers and their effects on the costs of making a product or providing a service is called ________.
A)account analysis
B)activity analysis
C)cost measurement
D)action analysis

Question

Quizplus · Accepted Answer

Activity analysis involves identifying the various activities that go into producing a product or service and determining the cost drivers that impact those activities. Through this process, managers can better understand the costs of production and make decisions about how to allocate resources to maximize efficiency and profitability. Account analysis involves reviewing financial statements to identify trends and patterns in costs and revenues, while cost measurement is the process of determining the actual costs of producing a product or service. Action analysis is not a commonly used term in cost accounting.

The Process of Identifying Appropriate Cost Drivers and Their Effects