Batch-Level Activities

In managerial accounting, production costs that are incurred only when a new batch is processed. These costs might include things like set-up time, moving materials and loading machines. For these costs, it does not matter how many units are produced in the batch.

It is important to understand by which manner costs are incurred for two primary reasons. First, when financial managers understand that certain costs are incurred by batch, they may choose to run larger batches in order to minimize cost. Second, understanding the batch cost allows managerial accountants to more accurately assign production costs to end products. This makes a product profitability analysis more accurate.