Question

The division of activities into unit-level, batch-level, product-sustaining level, and facility-level categories is commonly known as a cost:
A. object.
B. application method.
C. hierarchy.
D. estimation method.
E. classification scheme that is useful in traditional, volume-based systems.

Answer 1

Answer:

C) hierarchy.

Explanation:

A unit level cost is a cost incurred every time one unit is produced, e.g. a bottle.

A batch level cost is a cost related to a group or batch of units produced, e.g. a box containing 20 units.

A product sustaining level cost is a cost related to the activities undertaken to support an individual type of product, e.g. software updates.

A facility level cost is a cost incurred in order to maintain a productive facility working, e.g. lighting and cleaning costs.