Cost Driver Definition | Becker

Accounting Dictionary

Cost Driver

A cost driver is a factor that has the ability to change total cost. Typically, cost drivers are activity bases that are closely correlated with the incurrence of manufacturing overhead costs in an activity center, and they are often used as allocation bases for applying overhead costs to cost objects. Cost drivers may be based on volume (output), activity, value added, or any other operational characteristics. See also cost object and cost pool.

Related Terms:

Cost Object [BAR]Cost Pool [BAR]Back to Dictionary

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