In general, activities and costs should be combined in an activity-based costing system only if they fall within the same level in the cost hierarchy.

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In an activity-based costing system, activities and costs are grouped based on the cost hierarchy levels (unit-level, batch-level, product-level, and facility-level) to accurately allocate costs according to the resources consumed by each activity.

In General, Activities and Costs Should Be Combined in an Activity-Based