Which of the following is an appropriate cost driver for allocating indirect costs to a human resources department in a service company?
A) Number of employees
B) Number of customers
C) Square footage of office space
D) Either number of employees or square footage of office space depending on the nature of the indirect cost

Question

Quizplus · Accepted Answer

The appropriate cost driver for allocating indirect costs to a human resources department in a service company can vary. The number of employees is often a relevant driver because HR activities frequently scale with the size of the workforce. Similarly, the square footage of office space can be a relevant driver for costs related to facilities or utilities. Therefore, the choice depends on the nature of the indirect cost being allocated.

Which of the Following Is an Appropriate Cost Driver for Allocating