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:

Total flight hours of all drones

Number of battery swaps performed

Total weight of packages delivered

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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