A good cost driver should have a high correlation with
A)the actual number of units produced.
B)the actual consumption of overhead costs.
C)the actual number of products produced.
D)the actual consumption of direct costs.

Question

Quizplus · Accepted Answer

A good cost driver should have a high correlation with the actual consumption of overhead costs. This means that as the cost driver increases or decreases, there should be a corresponding increase or decrease in the overhead costs incurred. The other options, while related to production, do not necessarily have a direct correlation with overhead costs.

A Good Cost Driver Should Have a High Correlation with