Indicate whether each of the following statements is true or false.When a company can identify more than one cost driver for a particular cost, it should use the cost driver with the strongest cause-and-effect relationship to the cost. Availability and cost of information are likely to influence a company's choice of cost drivers. A company should never use a cost driver unless there is a strong causal relationship between the cost and the cost driver. Different cost drivers almost always give about the same results when a cost is allocated to cost objects. In allocating costs among departments, a company must consider how department managers are likely to respond.
What will be an ideal response?
| When a company can identify more than one cost driver for a particular cost, it should use the cost driver with the strongest cause-and-effect relationship to the cost. | True |
| Availability and cost of information are likely to influence a company's choice of cost drivers. | True |
| A company should never use a cost driver unless there is a strong causal relationship between the cost and the cost driver. | False |
| Different cost drivers almost always give about the same results when a cost is allocated to cost objects. | False |
| In allocating costs among departments, a company must consider how department managers are likely to respond. | True |
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