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18 June, 13:06

Which would be an appropriate cost driver for the shipping and receiving? activity?

a. number of inspections

b. number of batches

c. number of pounds of product shipped

d. number of machine hours?

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Answers (1)
  1. 18 June, 13:34
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    Cost drivers refer to the activities that cause changes in activity costs, it is any factor that make the cost of an activity to change, either increasing or decreasing. Cost driver is a concept that is used in Activity Based Costing and it is based on the belief that activities result in costs. In the question given above, the correct option is D. This is because, the number of pounds of product shipped will determine the cost to be paid for shipping.
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