In the activity based costing method implementation, an output unit level costs are classified as ____________?
Correct answer: A. indirect costs
- A. indirect costs
- B. direct cost
- C. labor cost
- D. raw material cost
Explanation
In ABC, output-unit-level activity costs are commonly treated as indirect costs and allocated to products using an activity driver such as machine hours or units produced. Direct materials and direct labour are examples of unit-related costs but are not the classification being asked for here.
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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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