Asked by Adarsh Prasad on Jun 04, 2024
Verified
Identify and explain the four control levels associated with activity-based costing.
Activity-Based Costing
A costing method that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption.
Control Levels
The different stages or layers of management and supervision within an organization, designed to ensure policies and procedures are implemented effectively.
- Differentiate among the various activity levels (unit-level, batch-level, product-level, facility-level) with respect to their impact on production and costing.
Verified Answer
(1)Unit level activities are performed on each product unit.
(2)Batch level activities are performed only on each group of activities.
(3)Product level activities are performed on each product line and are not affected by either the numbers of units or batches.
(4)Facility level activities are performed to sustain facility capacity as a whole and are not caused by any specific product.
Learning Objectives
- Differentiate among the various activity levels (unit-level, batch-level, product-level, facility-level) with respect to their impact on production and costing.
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