Relate to a company's strategic choices, such as location, scale of operations, or the technologies used.
: Maya notices her ingredient bill is up. The cost driver here is the number of loaves produced . The more bread she bakes, the more flour she must buy. what is cost drivers
“If you can’t explain what drives a cost, you can’t control it effectively.” Relate to a company's strategic choices, such as
Cost pool ($100,000 maintenance) → Cost driver (machine hours) → Cost object (Product X gets 30% of hours → $30,000) Relate to a company's strategic choices
: Her maintenance costs spiked. She realizes the cost driver isn't just "time," but the number of machine setups or hours the oven ran at high heat.