Why are the benefits of adopting ABC/ABM higher for companies in competitive markets?
A)Because ABM can pinpoint opportunities for cost savings
B)Because accounting /information system expertise is inexpensive to develop
C)Because accurate product cost information is not as relevant for price setting
D)Because companies in competitive markets have low indirect costs

Question

Quizplus · Accepted Answer

Adopting ABC/ABM can help companies in competitive markets to pinpoint opportunities for cost savings, which can give them a competitive advantage. By accurately allocating expenses, they can identify areas where they can reduce costs without sacrificing the quality of their products or services.

Answer: C
 In competitive markets, price setting is crucial to remain competitive. Accurate product cost information is necessary for setting prices that are both reasonable for customers and profitable for businesses. Adopting ABC/ABM can provide companies with this critical cost information, giving them an edge over their competitors.

Therefore, the best choices are A and C.

Why Are the Benefits of Adopting ABC/ABM Higher for Companies