468 Accounting: Business Reporting for Decision Making
(continued)The change would affect about 10 per cent of properties in Palmerston, which is a satellite city of
Darwin.
At a rally on Tuesday night, property owners said they could be slugged with hundreds of dollars in
increased fees and complained the 21-day community consultation period was too short.
Resident Athina Pascoe-Bell said her rates were almost doubling.
‘I’m paying an extra $820 a year but I must be one of the cheaper houses in Palmerston because
every other neighbour is paying over $1000,’ she said.
In response, Mayor Ian Abbott said the council had not yet decided if it would push ahead with the
plan.
‘At the moment it is simply a proposal to the community council,’ he said.
‘We will meet on June the 30th after public consultation and take all those viewpoints into account
and we’ll base any of those decisions at that point.’
Source: ‘Palmerston City Council rate changes could cost residents “hundreds of dollars”, protesters say’, ABC News,
23 June 2015, http://www.abc.net.au/news/2015-06-23/palmerston-city-council-rate-changes-could-cost-hundreds/6568358.A cost driver provides a useful measure of activity that helps to allocate indirect costs, such as IT, to the correct
cost object.
Cost drivers can be classified as either volume drivers, resource drivers or activity drivers. Volume
drivers use a measure of output (or volume) to assign the indirect costs; for example, labour hours,
machine hours or units of output. It is assumed that indirect costs are consumed by the cost object
in relation to its use of the volume driver. For example, if machine hours are selected as the cost
driver, then each cost object will be assigned indirect costs in proportion to its use of machine hours.
However, if indirect costs are caused by factors other than volume, then incorrect allocation may
lead to cross-subsidisation between the cost objects. That is, cost objects that use more of the cost