Which of the following statements is false regarding cost drivers?
A) A particular cost driver may be used for more than one activity.
B) If employees know the cost driver(s) for their department, it may motivate them to be more efficient.
C) The selection of a cost driver should be based on the correlation it has with direct materials used in the production process.
D) The best cost driver for a particular activity may be different from one company to the next.

Question

Quizplus · Accepted Answer

The selection of a cost driver should not necessarily be based on the correlation it has with direct materials used in the production process. Other factors such as the level of influence the cost driver has on the activity and the ease of measurement should also be considered.

Which of the Following Statements Is False Regarding Cost Drivers