Management accountants use the cost hierarchy to first calculate the total costs of each product and then they derive per-unit costs by dividing total costs by the number of units produced.

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The cost hierarchy is a common tool used by management accountants to allocate costs to products or services. It involves grouping costs into different categories based on their level of traceability to the product or service being produced. By first calculating the total costs of each product and then dividing by the number of units produced, management accountants are able to derive per-unit costs for each product.

Management Accountants Use the Cost Hierarchy to First Calculate the Total