What should determine whether an allocation base is a good cost driver in a service organisation?
A) Whether or not it satisfactorily links to the service cost object
B) Whether or not it links the service cost to the service cost object
C) Whether or not the base can be measured with absolute accuracy
D) Whether or not the service cost being allocated is large

Question

Quizplus · Accepted Answer

A good cost driver in a service organization should effectively link the service cost to the service cost object, ensuring that the allocation of costs accurately reflects the consumption of resources by different cost objects.

What Should Determine Whether an Allocation Base Is a Good