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CA Intermediate · Cost and Management Accounting · Activity Based Costing

In Activity Based Costing, which of the following is the best example of a batch-level activity?

Setting up machines before each production run is a batch-level activity, because it is performed once per batch whatever the number of units in the batch. Unit assembly is unit-level, product design is product-sustaining, and plant security is facility-level.

  1. ASetting up machines before each production runCorrect
  2. BPlant security and building maintenance
  3. CDesigning a new product variant
  4. DAssembling each individual unit

Explanation

Batch-level activities are performed each time a batch is processed, irrespective of the number of units in it. Machine set-up occurs once per batch. Assembly of each unit is unit-level, design is product-sustaining, and plant security is facility-sustaining.

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