FNG Corporation employs 4 purchasing agents. Rick processes purchase orders for vendors starting with the letters A through H, while Merrill does the same task for vendors from I through N. Esteban deals with vendors in the O through R range, and Kathy handles the rest of the alphabet. The most likely cost driver for the purchasing agents' salaries is the:
A) Number of vendors within each alphabetical segment
B) Number of purchase orders processed each month
C) Average dollar amount of each purchase order
D) Number of product lines FNG produces

Question

Quizplus · Accepted Answer

The number of purchase orders processed each month is likely to be the cost driver for the purchasing agents' salaries, as this directly relates to the amount of work that they are doing in their roles. The other options (number of vendors within each alphabetical segment, average dollar amount of each purchase order, and number of product lines FNG produces) may have an impact on the purchasing agents' work, but they are less likely to be direct drivers of salary costs.

FNG Corporation Employs 4 Purchasing Agents