If the cost object is the product,from the choices given,the cost driver that would be the most accurate means of allocating the overhead costs for the Ordering and Receiving department is:
A)set-ups.
B)purchase orders.
C)machine hours.
D)machine set-ups.

Question

Quizplus · Accepted Answer

The most accurate cost driver for the Ordering and Receiving department would be purchase orders since this department is responsible for placing and receiving orders. Allocating overhead costs based on the number of purchase orders is a logical and direct way to assign the costs to the products being ordered and received. Set-ups and machine-related drivers would not accurately reflect the costs incurred by the Ordering and Receiving department.

If the Cost Object Is the Product,from the Choices Given,the