In Activity-Based Costing (ABC), any event that causes the consumption of overhead resources is known as a(n):

• A. cost pool
• B. activity driver
• C. cost object
• D. cost driver

Answer: (D)

Verified step by step guidance

1. Understand the concept of Activity-Based Costing (ABC): ABC is a method of allocating overhead costs based on activities that drive costs, rather than using a single allocation base like direct labor hours or machine hours.
2. Define the term 'cost driver': A cost driver is any factor or event that causes the consumption of overhead resources. It is used to assign costs to activities in ABC.
3. Differentiate between the terms: 'cost pool,' 'activity driver,' and 'cost object': A cost pool is a grouping of individual costs, typically by department or activity. An activity driver is a measure of the frequency or intensity of a demand placed on an activity. A cost object is anything for which a cost is measured, such as a product or service.
4. Relate the definition of 'cost driver' to the problem: Since the question asks for the term that represents an event causing the consumption of overhead resources, the correct term is 'cost driver,' as it directly aligns with the definition provided.
5. Confirm understanding: Ensure that the student understands why 'cost driver' is the correct answer by reviewing the definitions and their applications in Activity-Based Costing.