Cost Drivers

A non-linear expenditure in relation to production is referred to as a cost driver. The underlying reason for driving costs in either a positive or negative direction over a production run or within an operating time period is referred to as a cost driver.

Cost Drivers in Small Business

Cost Drivers in Business

The textbook answer defines cost drivers as those factors that determine the overall cost of operations.  As an example, in manufacturing the cost drivers may be processing time or number of steps to produce the product.  In service, the cost drivers could be the actual ratio of billable to non-billable time.

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