What Is The Cost Driver Hot! [ 360p ]

A is a factor or variable that has a direct cause-and-effect relationship with the total cost of an activity or product. When the level of a cost driver changes, it triggers a corresponding change in the total cost incurred. 1. Core Concept

: The driver is the "cause" (e.g., number of machine setups), and the cost is the "effect" (e.g., setup labor costs). what is the cost driver

To understand how different costs have different drivers, consider a hypothetical furniture manufacturing company: A is a factor or variable that has

: Strategic choices about a company's scale, scope, and experience, such as the size of a warehouse or the complexity of product design. number of machine setups)

Cost drivers vary depending on the industry, but they generally fall into several standard categories: