ACCA PM · Chapter 2 · Question 7 of 9
Which of the following costs is most likely to be driven by the number of production batches rather than the number of units produced?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Machine set-up costs
Explanation
Set-up costs are incurred each time a new batch is started, regardless of how many units the batch contains, so they are batch-level costs. Direct materials, machine running power and per-unit royalties all vary with the number of units.
More Activity-based costing MCQs
- Q9Which of the following is a recognised limitation of activity-based costing?
- Q1Delta Co makes two products, X and Y. Budgeted overheads are: machine set-ups $120,000; materials handling $80,000; machining $200,000…
- Q2Delta Co makes two products, X and Y. Budgeted overheads are: machine set-ups $120,000; materials handling $80,000; machining $200,000…
- Q3Delta Co makes two products, X and Y. Budgeted overheads are: machine set-ups $120,000; materials handling $80,000; machining $200,000…
- Q4Delta Co makes two products, X and Y. Budgeted overheads are: machine set-ups $120,000; materials handling $80,000; machining $200,000…