When combining activities in an activity-based costing system, batch-level activities should be combined with unit-level activities whenever possible.

Question

Quizplus · Accepted Answer

Batch-level activities are related to costs incurred every time a batch is produced, regardless of the size of the batch, while unit-level activities are related to costs incurred for every single unit produced. Combining them would distort the cost information, as their cost drivers are fundamentally different.

When Combining Activities in an Activity-Based Costing System, Batch-Level Activities