Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 9

Why are cost drivers based on direct labor widely used?

Step 1 of 2

Cost drivers:

Cost driver is a unit of a particular activity responsible for the change in the cost of the activity. In activity-based costing method, the overhead costs are assigned to a particular product basing on the cost driver.