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    unit level, batch level, product line, facility support cost

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    For the following lists of costs, indicate by the appropriate letter which category of activities each cost applies to : unit level (U), batch level (B), product line (P), or facility support (F):

    a. Machine fine-tuning adjustment cost (required after the production of each unit)
    b. Salary of vice president of finance
    c. Machine inspection cost (required after the completion of each day's production)
    d. Cost of the external audit firm
    e. Direct labor
    f. Product testing cost (performed at the start of each day's production)
    g. Direct materials
    h. Factory security cost
    i. Machine straight-line depreciation cost (Generally, machines are dedicated to producing a particular type of product.)
    j. Warehousing cost (Each type of product has its own warehouse)
    k. Employee training cost (Training is generally specific to different types of product)

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    Solution Preview

    a. U (as it can be identified each unit)
    b. F (The cost is allocated to all product line and cannot be identified even for a single product line)
    c. B ...

    Solution Summary

    Classifies 11 different types of costs on the product cost hierarchy and provides a small explanation for the classification. The problem will provide better clarity on how the different costs can be controlled or managed by the managers.