What is the primary trade-off that an accountant must consider when deciding whether to identify cost drivers?
A)Will the cost driver identiﬁcation provide different costs for different purposes?
B)Is the cost/beneﬁt of the process reasonable for more accurate cost behavior obtained?
C)Will the cost relationships be too complex to understand?
D)Will material-related drivers be more accurate than labor-related drivers?
E)There is no trade-off to consider when using cost drivers.

Question

Quizplus · Accepted Answer

The primary trade-off an accountant must consider when deciding whether to identify cost drivers is whether the cost/benefit of the process is reasonable for obtaining more accurate cost behavior. In other words, the accountant must weigh the cost of identifying and tracking cost drivers against the potential benefits of having more accurate information about cost behavior. The other answer choices are not the primary trade-off that accountants consider when identifying cost drivers.

What Is the Primary Trade-Off That an Accountant Must Consider