ExpertMedium2 marksMultiple Choice
ACCA · Question 12 · Syllabus C: Cost accounting techniques
SkyDrop, a drone delivery service, is implementing Activity-Based Costing (ABC). They have identified 'Drone Battery Swapping' as a major overhead activity pool.
Which of the following would be the most appropriate cost driver for this activity?
SkyDrop, a drone delivery service, is implementing Activity-Based Costing (ABC). They have identified 'Drone Battery Swapping' as a major overhead activity pool.
Which of the following would be the most appropriate cost driver for this activity?
Answer options:
A.
Total flight hours of all drones
B.
Number of battery swaps performed
C.
Total weight of packages delivered
D.
Number of drones in the fleet
How to approach this question
Look for the metric that has the most direct cause-and-effect relationship with the activity described.
Full Answer
B.Number of battery swaps performed✓ Correct
In Activity-Based Costing (ABC), a cost driver is the factor that causes a change in the cost of an activity. The most direct and accurate driver for the 'Battery Swapping' activity pool is the actual number of times a battery is swapped.
Common mistakes
Choosing a volume-based metric (like flight hours) that is correlated but not the direct driver of the specific activity.
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