Which of the Four Levels of the Cost Hierarchy Would

question 41

Multiple Choice

Which of the four levels of the cost hierarchy would be used by a dress manufacturer using an activity-based management for the routine maintenance of sewing machines?

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

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Definitions:

Predetermined Overhead Rate

A calculated rate used to allocate overhead costs to products or services, often based on a specific activity such as labor hours or machine hours.

Special Order

An order for products or services that is outside the company's normal scope of work, often requiring a custom quotation or pricing.

Direct Labor

The workforce costs directly involved in producing a product or delivering a service, excluding indirect labor expenses.

Differential Cost

The variance in overall expenses incurred when choosing one option instead of another.