Multiple Choice QuestionAll of the following are types of activities which cause overhead except:Multiple choice question.unit-levelbatch-levelfacility-levelcustomer-level
Question
Multiple Choice QuestionAll of the following are types of activities which cause overhead except:Multiple choice question.unit-levelbatch-levelfacility-levelcustomer-level
Solution
The question is asking which of the given options is not a type of activity that causes overhead. The options are:
- Unit-level
- Batch-level
- Facility-level
- Customer-level
To answer this question, we need to understand what each of these terms means in the context of cost accounting.
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Unit-level activities: These are activities that are performed each time a unit is produced. For example, the cost of materials for each unit.
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Batch-level activities: These are activities that are performed each time a batch is produced, regardless of how many units are in the batch. For example, the cost of setting up machinery for a batch.
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Facility-level activities: These are activities that are necessary for the facility to operate, regardless of how many units or batches are produced. For example, the cost of maintaining the building.
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Customer-level activities: These are activities that are performed for each customer, regardless of how many units or batches are produced for that customer. For example, the cost of providing customer service.
From these definitions, we can see that all of these activities can cause overhead. Therefore, the question seems to be flawed as all the options given can cause overhead in a business.
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