If a Cost Activity Does NOT Have Any Production-Related Cost

question 45

Multiple Choice

If a cost activity does NOT have any production-related cost driver that matches up with changes in the amount of overhead cost associated with the activity then:

• A) Any basis can be selected as a cost driver
• B) Direct labor hours should be used as the cost driver
• C) No cost driver should be selected; the costs should be treated as common costs
• D) Number of items produced should be the cost driver.

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Definitions:

Piagetian Theory

A theory of cognitive development that describes how children construct a mental model of the world around them in distinct stages of cognitive development.

Social Experiences

Interactions with others and the environment that contribute to the development of an individual's beliefs, attitudes, and behaviors.

Habituation-Dishabituation

The process by which an organism decreases or stops its response to a repetitive stimulus (habituation) and then increases its response again when the stimulus changes or is new (dishabituation).

Cognitive Abilities

The mental skills that involve the ability to reason, plan, solve problems, think abstractly, and learn.