Herndon Brothers Inc. produces a variety of "all natural" household cleaning supplies that it manufactures and distributes to various grocery stores along the west coast. Which of the following types of costs would most likely be a unit-level cost?

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Quizplus · Accepted Answer

Unit-level costs are those that are directly tied to the production of each unit. Energy costs for factory machinery are a prime example of a unit-level cost since the energy is consumed with each unit produced. The other options do not fit this description as package product design costs are typically incurred before the production process, machine setup costs may apply to multiple units, and depreciation on the factory building is a fixed cost that doesn't change based on the number of units produced.