6. Which of the following companies would benefit least from Activity-Based Cost
ID: 2540105 • Letter: 6
Question
6. Which of the following companies would benefit least from Activity-Based Costing? A. A manufacturing company with multiple products of various shapes, sizes and complexities B. A custom teddy bear company producing bears which are farmed out (outsourced) to local residents who make the bears in their homes. C. A wholesale warehouse company shipping 4,000 products to both retailers and wholesalers. D. An electronics manufacturer producing various types of consumer electronics. E. A food manufacturer which sells products targeting different customer segments.Explanation / Answer
Answer
Activity-Based Costing helps the company to identify different activities or process involves in the production and then allocates its Overhead to its process or activities in a more efficient way than the traditional methods.
A custom teddy bear company producing bears which are farmed out (Outsourced) to local residents who make the bears in their homes, In this Company is outsourcing the production, they are not making it themselves, so they will be least benefited from Activity-Based Costing.
Answer = B
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