A cost driver is:
A) a collection of cost pools
B) a cost-allocation base chosen arbitrarily
C) any factor which caused costs to be incurred
D) costs that behave in a similar manner

Question

Quizplus · Accepted Answer

A cost driver is any factor that causes costs to be incurred. It could be things like machine hours, number of employees, or volume of goods produced. Cost drivers are used to allocate costs to products or services based on the activities that caused the costs to be incurred. A cost driver is typically chosen based on its ability to accurately allocate costs and its relevance to the activity being measured.

A Cost Driver Is