E11.27 Activity-based budgeting; cost drivers

Suggest three activities and a possible activity driver for each activity that might be used as part of anactivitybasedbudgeting system in each of the following businesses:

1. automated car wash service

2. express parcel delivery service

3. pizza shop

4. hospital.

E13.27 Value-based management

Classify each of the following statements as true or false. In each case, provide reasons for your answer.

1.Value-based management is a method of decreasing return on assets.

2.Economic value added is a single-period measure.

3.Economic value added is equivalent to return on investment.

4.The measure of economic value added has similar disadvantages to residual income.

5.Measures of shareholder value can be used to evaluate new business strategies, as well as mergers and acquisitions.