A cost driver or allocation base provides a measure of activity that explains the cost object's use of the indirect cost.

Name: A cost driver or allocation base provides a measure of activity that explains the cost object's use of the indirect cost.
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Question

Quizplus · Accepted Answer

A cost driver or allocation base is indeed used to allocate indirect costs to cost objects based on the level of activity or usage, thereby explaining how the cost object consumes the indirect costs.

A Cost Driver or Allocation Base Provides a Measure of Activity