Consider the following factors:
I. The degree of correlation between consumption of an activity and consumption of a particular cost driver.
II. The likelihood that a particular cost driver will induce a desired behavioral effect.
III. The likelihood that a particular cost driver will cause an increase in the cost of measurement.
Which of these factors should be considered in the selection of a cost driver?
A) I only.
B) I and II.
C) I and III.
D) II and III.
E) I, II, and III.

Question

Quizplus · Accepted Answer

All three factors are important in selecting a cost driver. Factor I ensures that the cost driver accurately reflects the consumption of resources. Factor II ensures that the cost driver can influence behavior in a desired way, such as encouraging efficiency. Factor III considers the practical aspect of whether the cost driver will make the measurement process more expensive or complex, which is also an important consideration in its selection.

Consider the Following Factors