Which of the following costs are not capacity-sustaining activities in the product cost hierarchy?
A)Plant management.
B)Building depreciation and rent.
C)Heat and lighting.
D)Market research.

Question

Quizplus · Accepted Answer

Market research is not a capacity-sustaining activity in the product cost hierarchy. Capacity-sustaining activities are those that are necessary to keep the company's operations running at a certain level, regardless of the level of production or sales. Plant management, building depreciation and rent, and heat and lighting are all examples of capacity-sustaining activities, as they are necessary to maintain the plant's capacity to produce goods. Market research, on the other hand, is an example of a period expense, as it is not directly related to the production process and is incurred to gather information that will be used in making strategic decisions for the future.

Which of the Following Costs Are Not Capacity-Sustaining Activities in the Product