Question

Cost Drivers for Support Department Allocations

For each of the following support departments, select the cost driver listed that is most appropriate for allocating support department costs to responsible units. Your answer should include the number of the cost driver only.

Cost drivers to choose from:

Number of conference attendees
Number of computers
Number of employees trained
Number of cell phone minutes used
Number of purchase requisitions
Number of sales invoices
Number of payroll checks
Number of travel claims
Support Department Cost Driver
a. Accounts Receivable
b. Central Purchasing
c. Computer Support
d. Conferences
e. Employee Travel
f. Payroll Accounting
g. Telecommunications
h. Training

Answer 1

The most appropriate cost drivers for each support department allocation are:

Step-by-step explanation:

For the support department allocations, the most appropriate cost drivers for each department are:

1. Accounts Receivable: Number of sales invoices
2. Central Purchasing: Number of purchase requisitions
3. Computer Support: Number of computers
4. Conferences: Number of conference attendees
5. Employee Travel: Number of travel claims
6. Payroll Accounting: Number of payroll checks
7. Telecommunications: Number of cell phone minutes used
8. Training: Number of employees trained

Answer 2

In identifying a cost driver one should consider the extent to which a cost or a pool of costs varies in accordance with the cost driver. The higher the correlation between cost and the cost driver the more accurate will be the resulting of the understanding of cost behaviour.

Support Department Cost Driver/Cost drivers

a. Accounts Receivable / Number of sales invoices

b. Central Purchasing /Number of purchase requisitions

c. Computer Support /Number of computers

d. Conferences /Number of conference attendees

e. Employee Travel / Number of travel claims

f. Payroll Accounting /Number of payroll checks

g. Telecommunications /Number of cell phone minutes used

h. Training /Number of employees trained