The managers of HRY are analysing some of their corporate costs to determine the costs of each department's use of administrative services. The accountant wants to allocate the costs of payroll processing using an activity-based costing system. The most appropriate cost driver for the payroll processing cost pool is the
A) Number of pay periods per month
B) Number of employees
C) Average hourly wage for all employees
D) Maximum number of deductions from an individual employee's pay-cheque

Question

Quizplus · Accepted Answer

The most appropriate cost driver for the payroll processing cost pool is the number of employees as it reflects the actual volume of work and effort required to process and manage payroll for a certain number of employees. The number of pay periods per month could also be considered as relevant, but it may not accurately capture differences in workload between departments. Average hourly wage and maximum number of deductions are unlikely to have a significant impact on the cost of payroll processing.

The Managers of HRY Are Analysing Some of Their Corporate