If the cost object is the product,the cost driver that would be the most accurate means of allocating the overhead costs for the ordering and receiving department would be:
A) purchase orders.
B) delivery hours.
C) machine hours.
D) machine set-ups.

Question

Quizplus · Accepted Answer

The overhead costs incurred by the ordering and receiving department, such as salaries, office supplies, and equipment, are associated with the number of purchase orders processed rather than machine hours or set-ups. Therefore, using purchase orders as the cost driver to allocate overhead costs would result in a more accurate cost allocation for the cost object, which is the product.

If the Cost Object Is the Product,the Cost Driver That