Which of the following is a common driver used in cost allocation?

• A. Patient age, weather, and seasonality.
• B. Yearly budget cycles only.
• C. Physician specialty mix.
• D. Square footage, headcount, and activity measures.

Answer: (D)

Cost allocation relies on drivers that reflect how much of the organization’s resources are used. Square footage captures space-related costs, headcount represents labor costs, and activity measures (like procedures or patient encounters) reflect the actual work volume consuming resources. Together, they provide a concrete, proportional way to assign indirect costs to departments or services based on usage.

The other choices don’t align as well with resource use. Patient age, weather, and seasonality describe demand patterns or case mix rather than how much resource is consumed. Yearly budget cycles describe timing rather than what drives cost allocation. Physician specialty mix can influence resource use, but it’s not as universally applicable or direct a driver for allocating overhead across broad cost objects as the combination of space, staff, and activity metrics.