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CA Final · Integrated Business Solutions (Multidisciplinary Case Study with Strategic Management) · Strategic Cost & Performance Management

Case: Sahyadri Textiles Ltd benchmarks its cost of a standard fabric against the best-in-class competitor and finds its cost per metre of Rs 140 is higher than the competitor's Rs 120. Management also plans to reduce non-value-adding activities such as rework and internal material movement. Which pair of techniques does this describe?

The case describes benchmarking, which compares Rs 140 against the competitor's Rs 120, together with value-added or value chain analysis, which eliminates non-value-adding activities like rework and internal movement. Both aim to close the cost gap by identifying and removing waste.

  1. ABenchmarking and value chain/value-added analysisCorrect
  2. BBackflush costing and throughput accounting
  3. CTarget costing and standard costing
  4. DKaizen costing and transfer pricing

Explanation

Comparing own cost with a best-in-class competitor is benchmarking. Identifying and removing non-value-adding activities such as rework and movement is value-added (value chain) analysis. The other pairs do not match the facts described.

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