A Good Cost Driver Should Have a High Correlation with

question 41

Multiple Choice

A good cost driver should have a high correlation with

• A)the actual number of units produced.
• B)the actual consumption of overhead costs.
• C)the actual number of products produced.
• D)the actual consumption of direct costs.

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Definitions:

Business Transaction

An economic event or activity that changes the financial position or the assets and liabilities of a company.

Utility Expenses

Costs incurred by a business or individual for basic utilities such as water, electricity, gas, and sewage services.

Owner Investment

Capital put into a business by the owner(s) separate from earnings or loans, typically to start or grow the business.

Owner's Capital

Owner's Capital represents the total equity or net worth contributed by the owners or shareholders of a company, plus retained earnings.