Tutors-R-Us provides academic enrichment and review activities for high school students in 4 subject areas: English, mathematics, science, and history. In November 20x1, the firm's information system produced the following data: Number of Number of Percent of Direct
Tutors Students Faculty Costs
English 4 20 10% $ 6,000
Mathematics 3 24 25 8,000
Science 5 15 50 12,000
History 2 8 15 3,000
Regardless of subject area, clients pay $50 per hour for tutoring services. Costs associated with the Tutors-R-Us operations for November 20x1 included:
Facility rent $2,500
Custodial services 1,800
Utilities 600
Computer equipment amortization 800
Advertising 400
Which of the following groups of costs are most likely to have a common cost driver?
A)Advertising & computer equipment amortization
B)Computer equipment amortization & utilities
C)Utilities & custodial services
D)Utilities & advertising

Question

Quizplus · Accepted Answer

Utilities and custodial services are most likely to have a common cost driver as they are both related to the use and maintenance of the facility. The amount of electricity, water, gas, etc. used and the level of cleaning required are likely to be related to the size and usage of the facility. Therefore, it is reasonable to assume that these costs vary together and have a common cost driver. The other options do not have a clear relationship or common cost driver.

Tutors-R-Us Provides Academic Enrichment and Review Activities for High School