Which is a key factor in selecting a driver basis for allocations?

A key factor in selecting a driver basis for allocations is historical performance data. This is essential because historical data provides insight into past trends and patterns that can influence future allocations. By analyzing past performance, organizations can identify which drivers have been effective in allocating costs or revenues in the past and use this information to make informed decisions.

Using historical performance data allows for a better understanding of how different factors impact costs and profitability, leading to more accurate and reliable allocations. This method ensures that the driver basis reflects actual business operations rather than arbitrary choices or subjective preferences.

While other options may seem relevant, they do not have the same foundational impact on creating effective driver bases for allocations. User preferences could introduce bias without a solid data-backed rationale. Manual entry of values risks errors and may not consider the complexities of data relationships. Random selection lacks a systematic approach, which could result in misleading or ineffective allocations. Hence, reliance on historical performance data is crucial for making sound, data-driven allocation decisions.