Question: Often unit cost reduction where unit cost is a combination of variable cost and allocated fixed costs is cited as required for benchmarking either internally
Often unit cost reduction where unit cost is a combination of variable cost and allocated fixed costs is cited as required for benchmarking either internally or externally to demonstrate improvement. Explain why unit cost reduction does not prove improvement and therefore cannot be used for benchmarking. Explain the alternative method that will allow understanding whether an improvement has been achieved or not.
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