ACCA Applied Skills · Performance Management · Activity-based costing
Which statement about cost drivers in ABC is correct?
A cost driver is the factor that causes the cost of an activity to change, such as the number of orders placed or set-ups. It need not be volume based, which is why ABC can reflect resource use more accurately.
- AA cost driver must always be a volume-related measure
- BA cost driver is the factor that causes the cost of an activity to changeCorrect
- CA cost driver is the total cost of an activity cost pool
- DA cost driver is always direct labour hours
Explanation
A cost driver is the factor that causes the cost of an activity to change, such as number of orders or set-ups. It is not necessarily volume related, and it is not the pool total or a single fixed measure like labour hours.
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