For the following list 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 products.)
Whether to classify the cost as unit, batch, product of facility depends on how the cost chages. If it changes by units, then it is a unit level cost, if it changes by batch, then it is a batch level cost and so on.
a. Machine fine-tuning adjustment cost (required after the production of each unit) - Unit level since it ...
The solution explains the product cost hierarchy of the given costs.