Installing a New Control Panel on a Factory Production Machine

question 78

Multiple Choice

Installing a new control panel on a factory production machine would be classified in the ABC cost hierarchy as a (an)

• A)output unit-level cost.
• B)batch-level cost.
• C)product-sustaining cost.
• D)facility-sustaining cost.
• E)period cost because it is not related to the cost hierarchy.

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Definitions:

Future Use

The intention or plan to deploy resources, products, or services at a later date, often considering the long-term benefits or applications.

Conservation

The act of preserving, protecting, or restoring the natural environment, resources, and biodiversity for future generations.

User Cost

The opportunity cost of extracting and selling a non-renewable natural resource today rather than waiting to extract and sell the resource in the future; the present value of the decline in future revenue that will occur because a nonrenewable natural resource is extracted and sold today rather than being extracted and sold in the future.

Extraction Cost

All costs associated with extracting a natural resource and readying it for sale.