Select all that applyWhich methods help a company use cost drivers effectively?Multiple select question.improving supply chain efficiencycapturing all available economies of scaleincreasing inventory carrying costsoperating facilities at full capacityignoring employee morale
Question
Select all that applyWhich methods help a company use cost drivers effectively?Multiple select question.improving supply chain efficiencycapturing all available economies of scaleincreasing inventory carrying costsoperating facilities at full capacityignoring employee morale
Solution
The methods that help a company use cost drivers effectively are:
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Improving supply chain efficiency: This can reduce costs associated with transportation, warehousing, and inventory. It can also improve the speed and reliability of deliveries, leading to better customer service and potentially higher sales.
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Capturing all available economies of scale: Economies of scale occur when the cost per unit of production decreases as the volume of production increases. By capturing all available economies of scale, a company can reduce its cost per unit, thereby increasing its profitability.
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Operating facilities at full capacity: Operating facilities at full capacity can help a company spread its fixed costs over a larger number of units, thereby reducing the cost per unit. This can also increase profitability.
Increasing inventory carrying costs and ignoring employee morale are not effective methods for using cost drivers. High inventory carrying costs can eat into profits, and low employee morale can lead to lower productivity and higher turnover, both of which can increase costs.
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