The Managers of HRY Corporation Are Analyzing Some of Their

question 1

Multiple Choice

The managers of HRY Corporation are analyzing some of their corporate costs to determine the costs of each department's use of administrative services. The accountant wants to allocate the costs of payroll processing using an activity-based costing system. The most appropriate cost driver for the payroll processing cost pool is the

• A) Number of pay periods per month
• B) Number of employees
• C) Average hourly wage for all employees
• D) Maximum number of deductions from an individual employee's paycheck

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Definitions:

Activity Level

A measure of the volume or quantity of production or operations in a business, which can significantly impact costs.

Job Order Cost

The total cost associated with a specific job order, including direct materials, direct labor, and allocated manufacturing overhead.

Process Cost System

An accounting system used to track and assign costs to units of product in continuous, homogenous production processes.

Manufacturing Cost Elements

The elements of production expenses, usually consisting of direct materials, direct labor, and overhead costs related to manufacturing.