El Dorado Company has two production plants. Recently, the company conducted an

Question

El Dorado Company has two production plants. Recently, the company conducted an ABM study to determine the cost of activities involved in processing orders for parts at each of the plants. How might an operations manager use this information to manage the cost of processing orders? a) close down the plant with the highest costs to increase profits b) compare the cost to process an order and plant the nature of the orders to determine if costs are out of control. If out of control, investigate. c) set up an ABC costing system d) identify benchmarks

Explanation / Answer

El Dorado Company has two production plants. Recently, the company conducted an ABM study to determine the cost of activities involved in processing orders for parts at each of the plants. How might an operations manager use this information to manage the cost of processing orders? a) close down the plant with the highest costs to increase profits b) compare the cost to process an order and plant the nature of the orders to determine if costs are out of control. If out of control, investigate. c) set up an ABC costing system d) identify benchmarks Accounting

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