respond to "Individual Answer" below. Also, include references as well. I included the initial question. Original Question: Would your company be more likely to benefit from using a manufacturing cost hierarchy or a customer cost hierarchy for determining cost drivers? Explain your answer and identify one cost for each of the four cost hierarchy categories. Individual Answer: My company is a nationwide tour organization that offers, among other things, historical trolley tours in some of the nations most interesting cities such as Key West, FL and San Diego, CA. We measure production in customer ridership. Therefore, a customer cost hierarchy is more appropriate for determining cost drivers. An article on accounting-financial-tax.com (2010) states that The most basic cost driver is customer demand. Without customer demand for products or services, the organization cannot exist. Historic Tours of America, Inc. measures costs against how many customers are served each day. Our ridership dictates how many trolleys we have in any given market and how many trolley drivers need to be scheduled each day. Ridership also determines how many managers, ticket sales reps and administrators are need to support the trolley drivers in a given period. Since our business is somewhat seasonal, the needs change with the season in some cities. For example, during winter in Boston, MA far fewer trolley drivers are required to service a shortened tour route. With all of the in mind, the following are some example of costs in our organization: Variable: Commission for sales reps, maintenance on vehicles and wages for drivers change monthly depending upon volume of customers and needed repairs. Fixed: Mortgage payments, long term debt payments and liability insurance is the same each month unless there is a substantive change such as a refinance or renewed insurance policy. Mixed: The cost to run the trolley every day is mixed because there is a fixed cost of owning the trolley such as purchase price, registration, etc. However, the cost of fuel changes with not only the price of gasoline, but also how many tours that trolley gives each day. Step: The decision to expand with more trolleys or more tours in any given city would be a step cost because it would involve both fixed and variable expenses that increase with the additional volume. With each tour added the costs change. As explained by Harrison, Jr., W.T., Horngren, C.T. & Thomas, C.W. (2015) the cost changes abruptly because the resources and their costs come in indivisible chunks. References Accounting-financial-tax.com (2010). Retrieved from: http://accounting-financial-tax.com/2010/05/cost-drivers-and-its-hierarchies/ Harrison, Jr., W.T., Horngren, C.T. & Thomas, C.W. (2015). Financial Accounting. Upper Saddle River, NJ: Pearson Education, Inc