In activity-based costing (ABC), unit-level costs are highest in the:
A)growth phase of a product's life cycle.
B)introduction phase of a product's life cycle.
C)maturity phase of a product's life cycle.
D)decline phase of a product's life cycle.

Question

Quizplus · Accepted Answer

Unit-level costs are the costs incurred to produce one unit of a product or service, and are typically highest during the introduction phase of a product's life cycle. This is because during this phase, the company is investing heavily in research and development, marketing, and production setup costs to bring the product to market. As the product moves into the growth and maturity phases, these costs become spread out over a greater number of units produced and sold, resulting in lower unit-level costs. In the decline phase, unit-level costs may increase again as production volumes decrease and fixed costs become spread out over a smaller number of units.

In Activity-Based Costing (ABC), Unit-Level Costs Are Highest in The