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Hi there,
I need some assistance with identifying what the appropriate cost driver would be for quality testing?
The options I have available are:
1. Labour Hours
2. Machine time
3. No. of batches created
4. Sales DemandWould really appreciate some help
ThanksIt depends on what other information there is in the question. Most likely it would be the number of batches because more batches means more work testing. Machine time is unlikely to be at all relevant because they are not likely to use machines to do the testing. Labour time producing units is not going to be relevant because this has nothing to do with testing. Sales demand could be relevant, but only if the testing was only done when the units actually come to be sold, which is less likely.
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