In Accounting !!top!! — What Is Cost Driver

A true cost driver must have a cause-and-effect relationship with the cost.

Misidentifying a cost driver leads to distorted product costs and bad decisions. Follow these four steps: what is cost driver in accounting

By identifying what actually "drives" a cost, managers can make better decisions regarding pricing, budgeting, and process improvements. Common Examples of Cost Drivers A true cost driver must have a cause-and-effect

There are several types of cost drivers, including: what is cost driver in accounting

Cost drivers generally fall into three categories based on the behavior of the costs they influence:

Cost drivers vary depending on the industry and the specific "cost pool" (a grouping of individual costs) being analyzed: