A key concept underlying cost driver analysis is that
A)all cost drivers identified should be used for cost accumulation.
B)the cost of measuring a driver does not exceed the benefits of using it.
C)only costs occurring at the unit-level should be assigned to products or services.
D)organizational/facility costs are non-value-added and should never be assigned to products or services.

Question

Quizplus · Accepted Answer

Cost driver analysis involves identifying the factors that drive the costs of an organization's products or services. However, it is important to ensure that the cost of measuring a driver does not exceed the benefits of using it. This means that only relevant and significant cost drivers should be used for cost accumulation, and not all cost drivers identified. Additionally, cost drivers can include costs occurring at both unit-level and organizational/facility level, and these costs should be assigned to products or services if they are deemed to add value. Therefore, options A, C, and D are incorrect.

A Key Concept Underlying Cost Driver Analysis Is That