Question

Classify each of the following costs as​ unit-level, batch-level,​ product-level, or​ facility-level.

a.	Product line manager salary	▼
b	CEO salary	▼ Batch-level Batch-level or Facility-level Batch-level or Unit-level Facility-level Facility-level or Product-level Facility-level or Unit-level Product-level Unit-level
c.	Machine​ set-up costs that are incurred whenever a new production order is started	▼ Batch-level Batch-level or Facility-level Batch-level or Unit-level Facility-level Facility-level or Product-level Facility-level or Unit-level Product-level Unit-level
d.	Direct materials	▼ Batch-level Batch-level or Facility-level Batch-level or Unit-level Facility-level Facility-level or Product-level Facility-level or Unit-level Product-level Unit-level

e.	Order processing	▼ Batch-level Batch-level or Facility-level Batch-level or Unit-level Facility-level Facility-level or Product-level Facility-level or Unit-level Product-level Unit-level
f	Factory utilities	▼ Batch-level Batch-level or Facility-level Batch-level or Unit-level Facility-level Facility-level or Product-level Facility-level or Unit-level Product-level Unit-level
g.	Patent for new product	▼ Batch-level Batch-level or Facility-level Batch-level or Unit-level Facility-level Facility-level or Product-level Facility-level or Unit-level Product-level Unit-level
h.	Direct labour	▼ Batch-level Batch-level or Facility-level Batch-level or Unit-level Facility-level Facility-level or Product-level Facility-level or Unit-level Product-level Unit-level

i.	Cost to inspect each product as it is finished	▼ Batch-level Batch-level or Facility-level Batch-level or Unit-level Facility-level Facility-level or Product-level Facility-level or Unit-level Product-level Unit-level
j	Depreciation on factory	▼ Batch-level Batch-level or Facility-level Batch-level or Unit-level Facility-level Facility-level or Product-level Facility-level or Unit-level Product-level Unit-level
k.	Engineering costs for new product	▼ Batch-level Batch-level or Facility-level Batch-level or Unit-level Facility-level Facility-level or Product-level Facility-level or Unit-level Product-level Unit-level
l.	Shipment of an order to a customer

Answer 1

No.	Cost	Classification	Explanation
a.	Product line manager salary	Product-level	The salary is related to a product, so it can be better classified as Product level
b	CEO salary	Facility-level	CEO works whole of the company so his/her salary to be classified as facility level
c.	Machine​ set-up costs that are incurred whenever a new production order is started	Batch-level or Unit-level	Set up cost incurred for every new set up i.e. for new batches so it can be either classified as batch level of unit level. Quantity of units are known for each batch so set up cost can also be classified as unit level
d.	Direct materials	Unit-level	Direct material is used per unit so it can be classified as unit level cost
e.	Order processing	Batch-level or Unit-level	Order processing cost is incurred for every new order processed i.e. it can be classified as batch level or unit level. Quantity of units are known for each batch so order processing cost can also be classified as unit level
f	Factory utilities	Facility-level	Factory utilities cost is incurred for a factory so it can be classified as facility level cost
g.	Patent for new product	Product-level	Patent is for a product, it is to be classified as product level cost
h.	Direct labor	Unit-level	Direct labor is used per unit so it can be classified as unit level cost
i.	Cost to inspect each product as it is finished	Batch-level or Unit-level	Inspection is done once the batch is complete, inspection cost can be classified as batch level or unit level cost. Quantity of units are known for each batch so inspection cost can also be classified as unit level
j	Depreciation on factory	Facility-level	Factory depreciation is on factory, it should be classified as facility level cost
k.	Engineering costs for new product	Product-level	Engineering costs is for a product, it is to be classified as product level
l.	Shipment of an order to a customer	Unit-level	Order shipped will have known quantity of units so shipment cost to be classified as unit level cost