A cost driver is:
A)An overhead or activity rate.
B)A basis used to allocate each of the activity cost pools.
C)The estimated cost of each activity pool.
D)Used only to allocate non-volume-related costs.

Question

Quizplus · Accepted Answer

A cost driver is a factor that influences or contributes to the expense of certain business operations. In activity-based costing (ABC), a cost driver is used as a basis to allocate the costs in each activity cost pool to products or services, reflecting how different products or services consume the activities.

A Cost Driver Is