A cost allocation base refers to a ________.
A)cost object
B)sum total of costs to be allocated
C)cost driver
D)cost pool

Question

Quizplus · Accepted Answer

A cost allocation base is a measure that is used to distribute costs from a cost pool to cost objects. This measure is often called a cost driver because it is assumed to cause the costs in the pool to be incurred. Therefore, option C, cost driver, is the best choice. Option A, cost object, is incorrect because it is the entity for which costs are being allocated. Option B, sum total of costs to be allocated, is incorrect because it is not a measure used to allocate costs. Option D, cost pool, is part of the allocation process but it is not the measure used to distribute costs.

A Cost Allocation Base Refers to a ________