Cost driver is:
A)a mathematical relationship that shows how total costs vary with the factors that influence total costs
B)a factor that influences or "drives" total or average costs
C)a factor that influences quality of output and prices of inputs
D)a cost level.

Question

Quizplus · Accepted Answer

A cost driver is a factor that influences or "drives" total or average costs. It can be a variable, such as the number of units produced or the number of hours worked, that has a direct impact on the cost of production. Cost drivers are essential in cost accounting as they allow managers to analyze and understand the underlying factors that contribute to the costs of producing goods or services. Choice A is a description of a cost function, not a cost driver. Choice C refers to factors that affect input-output relationships, but not necessarily costs. Choice D is too vague and not specific enough to describe a cost driver. Cost driver is a factor that influences or "drives" total or average costs. It can be used to explain the changes in the costs of a product or service due to changes in the level of an activity or volume of production.

Cost Driver Is