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After reading this chapter, you should be able to:

  LO 1   Explain the concept of activity-based cost management.

  LO 2   Use the hierarchy of costs to manage costs.

  LO 3   Describe how the actions of customers and suppliers affect a firm’s costs.

  LO 4   Use activity-based costing methods to assess customer and supplier costs.

  LO 5   Distinguish between resources used and resources supplied.

  LO 6   Design cost management systems to assign capacity costs.

  LO 7   Describe how activities that influence quality affect costs and profitability.

  LO 8   Compare the costs of quality control to the costs of failing to control quality.