ExpertMedium2 marksMultiple Choice
ACCA · Question 13 · Cost accounting techniques
Section A
DataStream, a tech startup providing cloud hosting, is implementing Activity-Based Costing (ABC). They have identified 'Server Maintenance' and 'Data Transfer' as key cost pools.
Which of the following would be appropriate cost drivers for these activities? (Select ALL that apply)
Section A
DataStream, a tech startup providing cloud hosting, is implementing Activity-Based Costing (ABC). They have identified 'Server Maintenance' and 'Data Transfer' as key cost pools.
Which of the following would be appropriate cost drivers for these activities? (Select ALL that apply)
Answer options:
A.
Direct labor hours of the sales team
B.
Number of server maintenance requests
C.
Square footage of the corporate office
D.
Terabytes of data transferred
How to approach this question
A cost driver is the factor that causes the cost of an activity to increase. Match the driver to the specific IT activities mentioned.
Full Answer
In Activity-Based Costing (ABC), a cost driver is the unit of an activity that causes the change in activity's cost. For 'Server Maintenance', the number of maintenance requests or server hours is appropriate. For 'Data Transfer', the volume of data (Terabytes) is the direct driver.
Common mistakes
Selecting traditional volume-based drivers (like direct labor hours) that have no causal link to automated tech services.
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