Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 15

How do total variable costs, total fixed costs, average variable costs, and average fixed costs react to changes in the cost driver?

Step 1 of 3

Cost Driver: A cost driver can be described as unit of an activity that brings changes in the cost of that activity.

In simple terms, it can be described as the cost of an activity is dependent of the cost driver of such activity. Example of cost drivers are: labor Hours or machine hours.