Activity-based costing (ABC) will utilize cost drivers to allocate various costs. Which of the following would be an appropriate cost driver for an employee cafeteria?
A) Employee head count by department
B) Number of marketing campaigns
C) Number of meals purchased from the cafeteria
D) Square footage of facility

Question

Quizplus · Accepted Answer

Cost drivers can be subjective, and this question requires that you discern between the choices to determine which is most likely to be a cost driver used by an employee cafeteria. Employee head count by department (Choice A) is a cost driver that would most likely be used by information technology or first aid and wellness initiatives. Number of marketing campaigns (Choice B) would most likely be a cost driver used by marketing. Square footage of facility (Choice D) is a cost driver most likely used by grounds maintenance and security. Number of meals purchased from the cafeteria (Choice C) is the correct choice as it is the most sensible choice for an employee cafeteria since it is driven by food to be sold in the cafeteria.
But this does not tell you who used the cafeteria. Just because they cooked the meals does not mean someone ate them.
I updated this to be number of meals purchased from the cafeteria. Of the choices provided, it would be the most sensible cost driver.

Activity-Based Costing (ABC) Will Utilize Cost Drivers to Allocate Various