Requirement $1.$ Classify each activity cost as output$$ unit$-$level, batch$-$level,$$ product$-$ or$$ service$-$sustaining, or$$ facility$-$sustaining. Explain each answer.

Cost Item

Cost$-$type

a$.$

Direct labor

Output unit$-$level

b$.$

Equipment$-$related costs $($rent$,$ maintenance, energy, etc.$)$

Output unit$-$level

c$.$

Setup costs

Batch$-$level

d$.$

Costs of designing tests

Service$-$sustaining

Part $2$

Output$$ unit$-$level costs are

related to the number of units tested; required for each unit tested.

Part $3$

$$Batch$-$level costs are

$$

costs that can not be traced to individual services but support the company as a whole.

costs used to support individual services regardless of the number of units or batches tested.

related to a group of units of the service. They are not related to the number of units tested.

related to the number of units tested; required for each unit tested.