Cost driver definition example

 · A cost driver in accounting refers to any unit of action taken by a business that costs money. Study the definition, examples, and an analysis of cost drivers. A cost driver rate is the amount of indirect or variable cost assigned to each unit of cost driver activity. For example, you may apply indirect overhead to direct labor hours as $50 dollars per hour. In this case, for each hour of direct labor required for production, the company would then allocate $50 of indirect overhead costs to the production activities or output. Cost Driver .  · For example, the cost driver selected is machinery hours. After every 1, machine-hours, there is a maintenance expense of $ Therefore, every machine hour results in a 50 cent ( / 1,

The cost driver definition implicit driver option lets you use a table to define the driver quantities and driver targets using an implicit pointer to point to a particular table. Use this driver to specify specific subsets of costs such as transaction costs. An activity cost driver, also known as a causal factor, causes the cost of an activity to increase or decrease. An example is a change in the cost of warehousing or a change in the level of. A cost driver is a variable, such as the level of activity or volume, that causally affects total costs over a given time pan contributes the most to the cost, causes the cost! For example, the number of vehicles assembles Online Accounting is a driver of the costs of steering wheels on a motor-vehicle assembly line.

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