Which of the Following Is the Most Appropriate Cost Driver

question 240

Multiple Choice

Which of the following is the most appropriate cost driver for allocating the cost of warranty services?

• A) number of employees
• B) number of materials purchased
• C) number of machine hours
• D) number of service calls

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Definitions:

Years

A unit of time equivalent to 365 or 366 days, used to measure durations or periods on a calendar basis.

Payments

Transactions involving the transfer of money from one party to another, often in exchange for goods or services.

Interest Rate

The borrowing cost that a lender imposes on a borrower, designated as a percentage of the principal for the use of property or money.

Years

A unit of time equal to 365 days (366 in a leap year), commonly used as a basic measure for accounting periods, product warranties, and investment horizons.