A cost driver is:
A)the largest single category of cost in a company.
B)an indirect cost that is essential to the business.
C)a factor that causes variations in a cost.
D)a fixed cost that cannot be avoided.

Question

Quizplus · Accepted Answer

A cost driver is a factor that causes variations in a cost. It is not necessarily the largest category of cost in a company, nor is it always an indirect cost that is essential to the business. It also can be a variable cost that can be controlled or managed to impact the total cost of a product or service. It is not a fixed cost that cannot be avoided.

A Cost Driver Is