The four categories of activity costs in cost hierarchy are determined by the underlying factor that drives its costs.

Question

Quizplus · Accepted Answer

The four categories of activity costs in cost hierarchy are based on the underlying factor that drives its costs, such as the setup cost of a machine, the cost of ordering materials, the cost of inspecting finished products, and the cost of designing new products or modifying the current ones. These costs are organized in a hierarchy depending on their level of complexity and the degree of influence they have on the cost of the final product or service.

The Four Categories of Activity Costs in Cost Hierarchy Are