The cost hierarchy for an ABC system includes:
I. Unit-level activities
II. Marketing activities
III. Product-sustaining activities
IV. Administrative activities
A) I and III only
B) II and IV only
C) I and II only
D) III and IV only

Question

Quizplus · Accepted Answer

The cost hierarchy for an ABC system includes unit-level activities which are performed for every product or service unit, and product-sustaining activities which are necessary to support a particular product or service. Marketing and administrative activities are not directly related to producing or supporting a specific product or service, so they are not part of the cost hierarchy in this context. Therefore, the best choice is A, which includes only I and III.

The Cost Hierarchy for an ABC System Includes