5 UNIT-LEVEL ACTIVITIES ARE PERFORMED FOR REPLACED BY MACHINES; A DE...

8-5 Unit-level activities are performed for

replaced by machines; a decrease in direct labor

each unit that is produced. Batch-level activities

is accompanied by an increase in overhead. This

are performed for each batch regardless of how

violates the assumption that overhead cost is di-

many units are in the batch. Product-level activi-

rectly proportional to direct labor. Overhead cost

ties must be carried out to support a product re-

appears to be driven by factors such as product

gardless of how many batches are run or units

diversity and complexity as well as by volume, for

produced. Customer-level activities must be car-

which direct labor has served as a convenient

measure.

ried out to support customers regardless of what

products or services they buy. Organization-

sustaining activities are carried out regardless of