Hierarchy which is based on different types of cost allocation and drivers, is to categorize cost pool activity is classified as

The correct answer is: A. cost hierarchy.

A cost hierarchy is a classification of costs based on the different types of cost allocation and drivers. It is used to categorize cost pool activity. The four main types of cost allocation are direct, indirect, variable, and fixed. The four main types of cost drivers are volume, batch, product, and customer.

A cost hierarchy is important because it allows businesses to allocate costs more accurately. This can lead to more accurate financial reporting and better decision-making.

Here is a brief explanation of each option:

• A. cost hierarchy is a classification of costs based on the different types of cost allocation and drivers. It is used to categorize cost pool activity.
• B. price hierarchy is a classification of prices based on the different types of products or services. It is used to categorize price changes.
• C. activity hierarchy is a classification of activities based on the different types of costs or revenues. It is used to categorize activity costs.
• D. purpose hierarchy is a classification of purposes based on the different types of goals or objectives. It is used to categorize purpose costs.