A cost driver is defined as: (CMA adapted)
A)the largest cost in a manufacturing process.
B)a fixed cost that cannot be avoided.
C)the significant factor in developing a new product.
D)an indirect cost that cannot be traced to a particular cost objective but is essential to the business.
E)a causal factor that increases the total cost of a cost objective.

Question

Quizplus · Accepted Answer

A cost driver is a factor that causes or influences the cost of a particular cost objective, such as a product or service. It is a causal factor that increases the total cost of the cost objective. For example, in a manufacturing process, the number of units produced may be a cost driver as it affects the total cost of production. Therefore, choice E is the best answer.

A Cost Driver Is Defined As: (CMA Adapted)