Which of the following costs are capacity-sustaining activities in the product cost hierarchy?
A)Product specification.
B)Building depreciation and rent.
C)Product testing.
D)Machine setups.

Question

Quizplus · Accepted Answer

Building depreciation and rent are costs associated with maintaining the production facility's capacity to produce products. They are considered capacity-sustaining activities in the product cost hierarchy. Product specification, product testing, and machine setups are all activities that are necessary to produce a specific product and therefore are classified as unit-level activities.

Which of the Following Costs Are Capacity-Sustaining Activities in the Product