A cost hierarchy is useful to managerial accountants because it categorizes various activity cost pools on the basis of the different types of cost drivers,cost-allocation bases,or different degrees of difficulty in determining cause-and-effect relationships.

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A cost hierarchy is a tool used by managerial accountants to categorize different activity costs based on the various types of cost drivers, allocation bases, and difficulty in determining cause-and-effect relationships. It helps in better analysis and decision making by providing a clear understanding of the various cost components and their impact on the overall cost structure.

A Cost Hierarchy Is Useful to Managerial Accountants Because It