Activity-Based Management in a Manufacturing Firm

Consider the following actions of a manufacturing firm trying to manage the costs of material handling from the direct materials inventory to the production line.

Match each of the process improvements listed with how they deliver cost reductions.

Process Improvement

1. The material inventory is placed closer to the production line.
2. Production runs have been made longer (more units produced in each run).
3. More direct materials is being purchased.

Delivers Cost Reduction

1. By reducing the frequency of activity.
2. By improving the efficiency of the activity.
3. Neither (A) or (B).