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?

answer:

1. Set up an ABC costing system
2. Identify benchmarks
3. Compare the cost to process an order at each plant and the nature of the orders to determine if costs are out of control. If out of control, investigate
4. Close down the plant with the highest cost to increase profits