Which of the four levels of the cost hierarchy would be used by a dress manufacturer using an activity-based management for sewing seams on a garment?
A)Unit-level activity
B)Batch-level activity
C)Product-level activity
D)Facility-level activity

Question

Quizplus · Accepted Answer

Sewing seams on a garment is a direct labor cost and is incurred on a per-unit basis, making it a unit-level activity. This cost varies with the number of units produced and sold. Therefore, the dress manufacturer would use unit-level cost hierarchy to allocate the cost of sewing seams on a garment. Batch-level activity would be used for activities that are performed on a batch of products. Product-level activity would be used for activities that are performed on a particular product or product line. Facility-level activity would be used for activities that benefit the entire organization, such as rent, property taxes, and insurance.

Which of the Four Levels of the Cost Hierarchy Would