Which would be an appropriate cost driver for the purchasing activity cost pool?
A) Machine setups
B) Purchase orders
C) Machine hours
D) Inspections

Question

Quizplus · Accepted Answer

Purchase orders are the best choice as a cost driver for the purchasing activity cost pool because this cost pool includes the costs associated with issuing purchase orders to suppliers. The number of purchase orders issued is a reasonable basis for allocating these costs to products or departments that require purchasing activity. Machine setups and machine hours are more appropriate as cost drivers for production-related cost pools, while inspections are more appropriate as cost drivers for quality control-related cost pools.

Which Would Be an Appropriate Cost Driver for the Purchasing