If a department identifies more than one cost driver for overhead costs, the department ideally should _____.
A)put 80% of the cost into one pool and 20% into second pool
B)select a single cost driver
C)allocate 80% of the costs with 20% of the drivers
D)create as many cost pools as there are cost drivers

Question

Quizplus · Accepted Answer

When a department identifies more than one cost driver for overhead costs, creating as many cost pools as there are cost drivers is the ideal option. This allows for a more accurate allocation of costs based on the specific activities that are driving those costs. It also allows for greater transparency and understanding of how costs are being incurred within the department.

If a Department Identifies More Than One Cost Driver for Overhead