Which of the following quantities is an example of an activity driver in activity-based costing?
A)number of setups
B)number of orders placed
C)number of machine hours
D)all of the above

Question

Quizplus · Accepted Answer

All three quantities listed (number of setups, number of orders placed, number of machine hours) can be considered activity drivers in activity-based costing. Activity drivers are the factors that cause costs to be incurred in an organization and are used to allocate indirect costs to products or services based on the level of activity required to produce them. The number of setups is a driver of setup costs, the number of orders placed is a driver of ordering costs, and the number of machine hours is a driver of machine-related costs.

Which of the Following Quantities Is an Example of an Activity