Which of the following is the most appropriate cost driver for the purchasing department?
A)Number of orders placed
B)Direct labor hours
C)Machine hours
D)Direct labor cost

Question

Quizplus · Accepted Answer

Number of orders placed is the most appropriate cost driver because the purchasing department's primary responsibility is to place orders for materials, supplies, and other resources needed for production or operations. The more orders that are placed, the higher the department's costs will be. Direct labor hours and machine hours are more appropriate cost drivers for production departments, while direct labor cost is more relevant for departments that directly employ laborers.

Which of the Following Is the Most Appropriate Cost Driver