Which of the Following Statements Regarding Cost Drivers Is False

question 28

Multiple Choice

Which of the following statements regarding cost drivers is false?

• A) Cost drivers can have a motivational effect upon employees.
• B) Cost drivers should generally be chosen based on a cause-and-effect relationship between the driver and the specific cost being considered.
• C) Cost drivers are groups of overhead costs that are similar.
• D) An activity could have more than one potential cost driver.

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Definitions:

Compounded Semi-Annually

Interest on an amount that is calculated twice a year and added to the principal for future interest calculations.

Amortized

The process of paying off debt through regular payments over a set period, where the payments cover both principal and interest.

First Three Years

Referring to the initial period of three years from a specific start point, often used in the context of forecasting, planning, or analyzing early-stage performance.

Compounded Monthly

The process of calculating interest on both the initial principal and the accumulated interest from previous periods, done once per month.