Batch-level cost definition
/What is a Batch-Level Cost?
A batch-level cost is a cost related to a group of units, but which is not associated with specific individual units. For example, the cost incurred to set up a production run is associated with the batch of goods that are subsequently produced. The concept is used to allocate overhead , where batch-level costs are spread among the units in a batch.
Examples of Batch-Level Costs
There are several types of costs that are generally classified as batch-level costs. They are as follows:
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Material handling costs . There can be substantial costs associated with the movement of raw materials, work-in-progress, and finished goods within a production facility. These costs are incurred to shift the physical units in a batch from one location within the facility to another.
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Labor costs . There may be a number of activities associated with a batch, such as initially setting up production equipment, testing output, and conducting quality inspections.
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Equipment setup costs . There are nearly always some setup costs incurred whenever production equipment must be configured for a production run. This includes equipment calibration, as well as the loss of materials during test runs.