Which of the following would be considered a capacity-sustaining activityin the product cost hierarchy?
A)Plant management,building depreciation,rent,heating and lighting,market research,and customer records.
B)Market research,customer records,and promotion.
C)Machine setups and quality inspections.
D)Energy to run machines and direct materials.

Question

Quizplus · Accepted Answer

Capacity-sustaining activities are those necessary to maintain the overall production capacity of a company. This includes costs like plant management, building depreciation, rent, heating, and lighting, which are essential for maintaining the production facility's capacity, regardless of the level of production or the specific products being manufactured. Market research and customer records, although mentioned in option A, are not typically considered capacity-sustaining costs but are included in the broader category in this context.

Which of the Following Would Be Considered a Capacity-Sustaining Activityin