Management accountants use the cost hierarchy to first calculate the ________.
A) labor costs of each product and then they compute material costs
B) overhead costs of each product and then they compute prime costs
C) factory costs of each product and then they compute labor costs
D) total costs of each product and then they compute per-unit costs

Question

Quizplus · Accepted Answer

The cost hierarchy is used by management accountants to first calculate the total costs of each product, which includes direct materials, direct labor, and overhead costs. After determining the total costs, they can then compute the per-unit costs by dividing the total costs by the number of units produced. This approach helps in understanding the cost structure of products and in making pricing decisions.

Management Accountants Use the Cost Hierarchy to First Calculate the ________