The purchasing function of Style Group has previously allocated costs based on number of orders. Upon investigation, it has been revealed that some orders take considerably longer to process than others. Further fact$-$finding reveals the following:

The time is increased if specialist components are required, because it takes time to source supplies and agree on terms with suppliers.

The time to process orders is related to the number of components.

Time is increased if new suppliers are required to process opening accounts.

Identify ONE incorrect statement given below:

Solution

A$.$The number of orders is the only explanation of why the cost increases.

B$.$The number of orders does not give a full explanation of the cause of the cost.

C$.$Purchasing could be broken down into activities such as agreeing terms with suppliers, processing new accounts, and number of components.

D$.$Duration$-$cost drivers should only be considered if they are measurable and not too expensive to record.