Question

Choose a cost in your organization (or personal life). Now identify what drives that cost. Keep in mind that the cost driver is something that can be counted!

For instance, if I choose gasoline cost, my cost driver is the number of miles I drive to meet at clients' offices. At home, the cost driver for my electric bill is the number of people-days at my house - i.e. some months everyone is gone (low bill), and other times many houseguests makes for a high electric bill. What are your examples?

Answer 1

Below are some examples of Activity Cost and Cost Drivers that drives that cost

	Activity Cost	Activity Cost Drivers
1	Supervising Cost	Number of Direct Labor Hours
2	Personnel Hiring Cost	Number of employees hired
3	Inspection Cost	Number of Inspections
4	Material Handling Cost	Number of Materials requisitions
5	Purchasing Department Cost	Number of Purchase orders
6	Machine Setup Cost	Number of Setups
7	Painting Costs	Number of Parts
8	Research Projects	Hours spend on Project
		Number of research projects
9	Customer Service	Number of Products Serviced
		Number of Service Calls
		Hours spend on servicing products
10	Production	Number of electricity units consumed
		Number of Units produced
11	Assembling Cost	Number of parts
12	Machine Maintenance Cost	Machine hours
13	Water Cost	Number of People
14	Phone Cost	Number of People
15	Building Rent Cost	Square Feet
16	Network Cost	Using Hours
17	Engineering and Product Design Cost	Hours in Design department
18	Transport Cost	Distance

etc.