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Answer :
The selection of a cost driver primarily affects how costs are allocated within an organization and secondarily influences managerial decision-making with respect to financial management strategies.
The selection of a cost driver affects how costs are allocated in an organization. A cost driver is a factor that affects the cost of an activity, and in the case of a copier cost center, an intuitive cost driver would be the number of copies made. This cost driver would enable the organization to allocate indirect costs accurately to the services provided, thereby affecting the overall financial management strategy. Additionally, it influences how managers make decisions about resources and indirect costs, leading to leveraging economies of scale, diversifying customer bases, or pursuing new technologies.
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