Accounting cost drivers definition

Design and classification of cost drivers for accounting organizational and operational activities are usually the first cost accounting tasks to be handled. Cost drivers A cost driver is the unit of an activity that drives the change of cost in production or servicing. It refers to any activity that causes a cost to be incurred. According to the most simple definition, a cost driver is the unit of an activity that causes the change in activity's cost. A different meaning is assigned to the term by Michael Porter: "cost drivers are the structural determinants of the cost of an activity, reflecting any linkages or interrelationships that affect it". 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. In financial accounting, costs and expenses are used interchangeably. Choosing.

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. A cost driver is a unit that derives the expenses and sets a basis on which a particular cost is to be allocated between the different departments and on the basis of that driver’s activity completed in that particular period the cost is allocated. These are the structural determinants of the activities on which cost is being incurred and determine the behavior of the costs on an activity. COST DRIVER is any activity or series of activities that takes place within an organization and causes costs to be incurred. Cost drivers are used in a system of activity-based costing to charge costs to products or services. Cost drivers are applied to cost pools, which relate to common activities. Cost drivers are not restricted to departments or sections, as more than one activity may be identified within a department.

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