For estimation of each cost pool for cost function, the attention must be paid to __________?
Correct answer: D. cost hierarchy
- A. cost object hierarchy
- B. management hierarchy
- C. price hierarchy
- D. cost hierarchy
Explanation
Different cost pools are driven by different levels of activity, such as unit, batch, product, or facility-level activities. This cost hierarchy helps identify and estimate the appropriate cost function for each pool.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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