Which of the following is an appropriate cost driver for setting up production equipment for a production run?
A) Machine hours
B) Number of setups
C) Setup hours
D) Either B or Cnumber of setups or setup hours would be appropriate

Question

Quizplus · Accepted Answer

Activity-based costing uses both volume-based cost drivers and activity-based cost drivers.Volume-based drivers are appropriate for indirect costs that increase or decrease relative to the volume of activity.In this situation,the total cost of setting up production equipment would increase or decrease relative to the volume of setup hours or the number of setups.

Which of the Following Is an Appropriate Cost Driver for Setting