A framework for classifying value-adding and nonvalue-adding activities according to the level at which their costs are incurred is called a
A) bill of activities.
B) full product cost.
C) value chain.
D) cost hierarchy.

Question

Quizplus · Accepted Answer

A framework for classifying value-adding and nonvalue-adding activities according to the level at which their costs are incurred is called a cost hierarchy. The cost hierarchy consists of four levels: unit-level, batch-level, product-level, and facility-level activities. This framework is used in activity-based costing (ABC) to allocate indirect costs to products or services based on the level of activity that drives those costs. The other options (A, B, C) do not specifically refer to this type of framework.

A Framework for Classifying Value-Adding and Nonvalue-Adding Activities According to the Level