Cost drivers are used in Activity-Based Costing (ABC) to allocate various costs. Which of the following would be an appropriate cost driver for an area such as Marketing?
A) Number of invoices issued
B) Number of purchase orders filled
C) Number of reports requested
D) Number of marketing campaigns run

Question

Quizplus · Accepted Answer

This question requires discernment between the choices to determine which is most likely to be a cost driver used by Marketing. Number of invoices issued (Choice A), and Number of reports requested (Choice C) would be appropriate cost drivers to use for Accounting. Number of purchase orders filled (Choice B) would be an appropriate cost driver for the Purchasing/Supply chain. Number of marketing campaigns run (Choice D) is the correct choice as it is more likely to be used as a cost driver for a marketing department.

Cost Drivers Are Used in Activity-Based Costing (ABC) to Allocate