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.

Question

Quizplus · Accepted Answer

The division of activities into unit-level, batch-level, product-sustaining level, and facility-level categories is known as a cost hierarchy. This concept is fundamental in activity-based costing (ABC), which allocates costs more accurately to products or services based on the activities that generate costs.

The Division of Activities into Unit-Level, Batch-Level, Product-Sustaining Level, and Facility-Level