Skip to content

CA Intermediate · Cost and Management Accounting · Activity Based Costing

In Activity Based Costing, the factor that causes the cost of an activity to change, and which is used to assign the activity's cost pool to products, is called the:

The factor that causes an activity's cost to change and is used to assign the cost pool to products is the cost driver. Cost centres collect costs, cost units measure output, and cost objects are what is being costed, so none of these serve as the assignment basis.

  1. ACost driverCorrect
  2. BCost centre
  3. CCost unit
  4. DCost object

Explanation

A cost driver is the factor that causes the cost of an activity to change and is the basis for assigning activity cost pools to products. A cost centre is a location or function for which costs are collected. A cost unit is a unit of product or service, and a cost object is the item for which cost is measured.

Did you get it right without looking?

One question tells you little. A timed set on Activity Based Costing shows your real accuracy, how long you take and where you lose marks.

Practise Activity Based CostingFree diagnostic mock

More Activity Based Costing questions