MNK Corporation is a large public company that employs numerous accounts receivable clerks. Their jobs involve processing invoices and keeping the accounting records updated. Which of the following is the most likely cost driver for the accounts receivable activity cost pool?
A) Number of journal entries
B) Number of product lines produced by MNK
C) Number of invoices
D) Average dollar amount for each credit sale

Question

Quizplus · Accepted Answer

The number of invoices is the most likely cost driver for the accounts receivable activity cost pool as the accounts receivable clerks' primary job involves processing invoices and keeping accounting records updated. The number of journal entries pertains more to the general ledger activity cost pool, the number of product lines produced by MNK pertains more to the manufacturing overhead cost pool, and the average dollar amount for each credit sale is not a specific activity that accounts receivable clerks are responsible for.

MNK Corporation Is a Large Public Company That Employs Numerous