The cost hierarchy categorizes costs according to whether they are capacity,product,customer,batch,or unit costs.Management of an airline would most likely consider new flights using existing aircraft on established routes as being which of the following?
A)Capacity costs.
B)Product costs.
C)Batch costs.
D)Unit costs.

Question

Quizplus · Accepted Answer

Batch costs are associated with activities related to a group of units rather than individual units or the entire production process. Adding new flights using existing aircraft on established routes involves costs that are incurred for a batch of services (each flight can be considered a batch) rather than for the entire service capacity or individual passengers, making it a batch cost.

The Cost Hierarchy Categorizes Costs According to Whether They Are