Which One of the Four Levels of the Cost Hierarchy

question 119

Multiple Choice

Which one of the four levels of the cost hierarchy would be used by a dress manufacturer that uses activity-based management to design a pattern for a new dress style?

• A) Unit-level activity
• B) Batch-level activity
• C) Product-level activity
• D) Facility-level activity

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Definitions:

Variable Costs

Expenses that vary directly with the level of production or volume of output.

Average Variable Cost

The total variable cost divided by the quantity of output produced, showing how variable costs change with output levels.

Cost Curves

Graphical representations of the costs associated with producing different quantities of goods, showing how costs change with changes in output.

Economic Cost

Cost to a firm of utilizing economic resources in production.