Which of the following items is NOT a cost driver representing an "ability to bear" philosophy for cost allocation?
A)revenue of each division
B)cost of goods sold by each division
C)total costs of each division before allocation of central costs
D)usage

Question

Quizplus · Accepted Answer

Usage is not a cost driver that represents an "ability to bear" philosophy for cost allocation. It is a cost driver that reflects the actual consumption or demand for a particular resource or service. The ability to bear philosophy focuses on allocating costs based on factors such as revenue, profit, or total costs, which are indicators of a division's ability to bear the allocated costs. Therefore, options A, B, and C are all cost drivers that represent an "ability to bear" philosophy for cost allocation.

Which of the Following Items Is NOT a Cost Driver