Which of the following would be the most appropriate cost driver to allocate factory electricity costs to products?
A)Machinery depreciation expense.
B)Machinery maintenance work orders.
C)Machinery down-time.
D)Machine hours.
E)Machine productivity.

Question

Quizplus · Accepted Answer

Allocating factory electricity costs based on machine hours is the most appropriate cost driver as electricity consumption is directly proportional to the amount of time the machines are being used. Hence, it provides a more accurate allocation of costs compared to other choices.

Which of the Following Would Be the Most Appropriate Cost