Which of the following would be the most appropriate cost driver for the purchasing department?
A)Number of orders placed
B)Direct labor hours
C)Machine hours
D)Direct labor cost

Question

Quizplus · Accepted Answer

The number of orders placed is the most appropriate cost driver for the purchasing department as it directly relates to the activity of the department. The more orders placed, the more resources and time the department has to spend on purchasing activities. Direct labor hours and machine hours are more appropriate cost drivers for production activities, while direct labor cost is a better cost driver for labor-intensive operations.

Which of the Following Would Be the Most Appropriate Cost