The best allocation base choice for an ABC cost pool is a(n):
A) Cost driver
B) Activity dictionary
C) Allocation rate
D) Financial measure

Question

Quizplus · Accepted Answer

The best allocation base choice for an ABC cost pool is a cost driver. This is because cost drivers measure the quantity or frequency of an activity that causes a particular cost to be incurred. Therefore, by using cost drivers as allocation bases, ABC can more accurately assign overhead costs to the products or services that actually consume those resources.

The Best Allocation Base Choice for an ABC Cost Pool