APICS Certified Supply Chain Professional (CSCP) — Question 526

A manufacturer uses standard costing, and a potential supplier uses activity-based costing. This difference most likely will have implications for which of the following types of future decisions?

Answer options

• A. Price concessions
• B. Make-or-buy
• C. Distribution warehouse locations
• D. Freight terms

Correct answer: B

Explanation

The correct answer is B, as the make-or-buy decision directly involves cost analysis, which can vary significantly between standard costing and activity-based costing. The other options, such as price concessions, distribution warehouse locations, and freight terms, are less influenced by the costing methodology used by the supplier.