The classification of cost drivers into general levels of activity,volume,batch,product,and so on is known as:
A) cost allocation.
B) value-added costing.
C) a cost hierarchy.
D) cost driver management.

Question

Quizplus · Accepted Answer

The classification of cost drivers into general levels of activity, volume, batch, product, and so on is known as a cost hierarchy. This hierarchy is used to allocate costs to products or services based on the level of activity that causes those costs to be incurred. The cost hierarchy helps managers to understand the level of detail required for analyzing costs and making decisions. Choice A, cost allocation, refers to the process of assigning costs to cost objects. Choice B, value-added costing, is a method of cost accounting that identifies the value-added activities in a process and focuses on eliminating non-value-added activities. Choice D, cost driver management, refers to the process of identifying, analyzing, and managing cost drivers, which are the factors that influence the level of costs in a business.

The Classification of Cost Drivers into General Levels of Activity,volume,batch,product,and