The managers of HRY Corporation are analyzing some of their corporate costs to determine the costs of each department's use of administrative services. The accountant wants to allocate the costs of payroll processing using an activity-based costing system. The most appropriate cost driver for the payroll processing cost pool is the:
A) Number of pay periods per month
B) Number of employees
C) Average hourly wage for all employees
D) Maximum number of deductions from an individual employee's paycheque

Question

Quizplus · Accepted Answer

The number of employees is the most appropriate cost driver for the payroll processing cost pool as the cost of payroll processing is directly proportional to the number of employees. The more employees a company has, the more time, effort, and resources are required to process the payroll. The other options, while potentially affecting the cost of payroll processing, are not as directly linked to the actual processing of payroll as the number of employees.

The Managers of HRY Corporation Are Analyzing Some of Their