Any activity or factor that causes a cost to be incurred is known as a:
A) cost pool.
B) cost driver.
C) cost allocation.
D) cost object.

Question

Quizplus · Accepted Answer

A cost driver is the activity or factor that causes a cost to be incurred, and is crucial in determining the cost of a specific product or service. Cost pools refer to the grouping of costs for allocation purposes, cost allocation is the process of distributing costs to different departments or products, and a cost object is the product or service for which costs are being calculated. While these concepts are related, the term used for anything that causes a cost to be incurred is specifically referred to as a cost driver.

Any Activity or Factor That Causes a Cost to Be