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CMA Final · Strategic Cost Management · Activity Based Cost Management

In an activity based costing system, which of the following is the best example of a batch-level activity?

Machine setup for each production run is a batch-level activity because its cost is incurred each time a batch is processed, irrespective of the number of units in the batch. Unit-level, facility-level and product-sustaining activities behave differently.

  1. AMachine setup for each production runCorrect
  2. BMachine hours used on each unit
  3. CPlant security and building maintenance
  4. DDesign of a new product variant

Explanation

Batch-level activities are performed once for each batch regardless of the number of units in it; setups are the classic example. Machine hours on each unit is a unit-level activity, plant security is facility-level, and product design is product-sustaining.

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