Jasmine Doh is considering using cost drivers that are measured in dollars (rather than physical units) for her company. Your advice is:
A) This is a good idea as cost drivers measured in dollars are usually already recorded in the accounting system.
B) This is a good idea as it avoids estimating costs associated with each physical unit of cost driver.
C) This is a bad idea because dollar-based cost drivers are subject to price change.
D) This is a bad idea because using dollar-based cost drivers oversimplifies the cost allocation process.

Question

Quizplus · Accepted Answer

Dollar-based cost drivers are subject to price change, which can lead to inaccurate allocation of costs. Physical units are a more stable and reliable measure of cost drivers.

Jasmine Doh Is Considering Using Cost Drivers That Are Measured