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Hello Cath,
I will be posting some questions as I seem to struggle with P2 a bit.
Machine maintenance is a unit cost according to the Kaplan book but a facility level cost according to the BPP book.
So which is correct? I tend to say factory because maintenance must be carried out at specific times and not volume related, but I am not sure, especially that random sites on the internet tend to agree with Kaplan.
Hi,
Unit level costs increase with every single unit of product made. Machine maintenance costs can not be assigned to each product in this way.
They could be seen as generally volume related -yes -but the batch costs are volume driven too.
I think Kaplan have made a typo in this case- unless there are specific scenario details attached to the statement.
Machine maintenance is example of traditional factory overhead and is therefore a facility cost.
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