Selection of a Cost Driver Depends On

question 55

Multiple Choice

Selection of a cost driver depends on:

• A) The availability of information for both the cost and the potential cost driver.
• B) A cause-and-effect relationship between the cost driver and the cost.
• C) Judgment of management.
• D) All of these answers are correct.

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Definitions:

Order Processing

The sequence of steps involved in receiving and fulfilling customer orders for products or services.

Trade Sales Promotion

A promotion that encourages resellers to purchase and aggressively sell a manufacturer’s products by offering incentives like sales contests, displays, special purchase prices, and free merchandise.

Free Merchandise

Products or goods given away at no cost to promote a brand, product, or service.

Premiums

Extra payments required for insurance coverage or additional costs added to the usual price of services or goods, often in exchange for higher quality or added benefits.