Cost Driver In Activity Based Costing Jun 2026

| Activity | Cost Pool | Possible Cost Driver | |----------|-----------|----------------------| | Machine setup | Setup labor, supplies | Number of setups | | Quality inspection | Inspection labor, test equipment | Number of inspections | | Purchasing | Purchase orders, vendor management | Number of purchase orders | | Material handling | Forklift, labor | Number of material moves | | Customer service | Support staff, phone costs | Number of customer calls | | Production scheduling | Planner salaries | Number of production runs |

A cost driver acts as the bridge between the (the accumulated costs of a specific activity) and the Cost Object . By identifying the correct driver, organizations ensure that high-volume products do not subsidize low-volume, complex products. cost driver in activity based costing

A cost driver is the specific activity or event that causes a change in the cost of an activity. It is the "causal factor" used to assign overhead costs to cost objects (products, services, or customers). | Activity | Cost Pool | Possible Cost