Company A allocates one type of overhead cost on the basis of movement of materials. The number of movement of materials processed is an example of a(n):

Question

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The number of movement of materials processed is the cost driver for allocating overhead cost. A cost driver is a factor that drives the incurrence of a particular cost, and in this case, the movement of materials is a direct cause of the overhead cost. The other options, such as pool rate, overhead rate, and cost pool, are related to the process of allocating overhead costs but do not represent the cost driver itself.

Company a Allocates One Type of Overhead Cost on the Basis