3 Questions
Which of the following statements accurately describes value chain analysis?
It analyzes the business into a sequence of value-creating activities
Which statements about value chain analysis are correct?
1 and 4
What is the relationship between value chain analysis and absorption costing?
Value chain analysis is closely linked to absorption costing
Study Notes
Value Chain Analysis
- Value chain analysis is a method used to analyze the activities that a business performs to create value for its customers.
- It involves identifying and evaluating the primary and support activities that create value and contribute to a company's profitability.
- The primary activities include inbound logistics, operations, outbound logistics, marketing and sales, and service.
- The support activities include firm infrastructure, human resource management, technology development, and procurement.
Value Chain Analysis and Absorption Costing
- Value chain analysis is related to absorption costing, which is a method of costing that assigns both fixed and variable costs to products.
- Absorption costing is used to calculate the cost of producing a product, which is then used to determine the selling price.
- Value chain analysis helps to identify the activities that create value and contribute to the cost of producing a product, making it easier to apply absorption costing.
- By understanding the value chain, businesses can identify areas where costs can be reduced or optimized, leading to more accurate absorption costing.
Test your knowledge of value chain analysis with this quiz! Determine which statements are correct and learn about the key concepts and applications of value chain analysis in business.
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