Costs drivers can be based on either volume or activity.Which of the following is a volume based cost driver?
A)number of invoices processed.
B)time taken to set up machines.
C)number of inspections undertaken.
D)machine hours.

Question

Quizplus · Accepted Answer

Machine hours is a volume based cost driver as it is related to the amount of usage of the machine, and a higher volume of usage will lead to higher costs. The other options are activity based cost drivers as they are based on the number or frequency of activities, rather than the volume of production.

Costs Drivers Can Be Based on Either Volume or Activity