Assume that a factory seeks to allocate rent to several departments that occupy the factory.The factory is occupied by all the departments.Which of the following is the most logical cost driver for allocating the factory rent?
A) Number of employees
B) Square footage occupied by each department
C) Machine hours
D) Number of labor hours in each department

Question

Quizplus · Accepted Answer

The most logical cost driver for allocating the factory rent would be the square footage occupied by each department. As all the departments occupy the factory, the amount of space each department occupies is a reasonable measure for allocating the rent. Number of employees or number of labor hours may not accurately reflect the amount of space occupied by each department. Machine hours may be an appropriate cost driver for allocating maintenance or utility costs, but not for allocating rent.

Assume That a Factory Seeks to Allocate Rent to Several