CMA Final · Strategic Cost Management · Activity Based Cost Management
In an activity based costing system, which of the following is a unit-level activity whose cost driver is directly proportional to the number of units produced?
Machine hours consumed in machining each unit is a unit-level activity, because it is performed for every unit made and rises in proportion to output. Set-ups are batch-level, design changes are product-sustaining, and plant security is facility-sustaining, so none varies per unit.
- AMachine hours consumed in machining each unitCorrect
- BNumber of batch set-ups
- CProduct design changes for a product line
- DPlant security and building maintenance
Explanation
Unit-level activities are performed every time a unit is produced, so machine hours per unit vary with volume. Batch set-ups are batch-level, design changes are product-sustaining, and plant security is facility-sustaining; none varies with each unit.
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