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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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A batch-level driver is consumed by a product each and every time that

  1. a. a batch of products is produced.
  2. b. a unit is produced.
  3. c. a purchase order is issued.
  4. d. a customer complains.
  5. e. None of these.

To determine

Identify the correct statement with respect to batch-level driver.

Explanation

Batch-Level Activities:

The batch-level activity is one of the proponents of activity-based costing in which cost is categorized according to the production of the units in a batch. The batch-level driver includes a quality test of every batch, cost of setting up the equipment for every batch, maintenance of each batch.

a.

In batch-level activities, the cost of the product is associated with the number of units produced in the batches and the cost varies each and every time with the number of batches. Therefore, this option is correct.

b.

The cost of the product varies with the number of units produced is associated with unit-level activities, not with the batch-level activities...

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