Cost Driver

Factor that causes or is used to allocate a cost, such as machine hours, setups or purchase orders.

Examples

01The controller finds that the number of setups is the main cost driver for the paint shop, not the number of parts painted.
02In the review, costs are shown against their cost driver, such as purchase orders for buying costs or machine hours for energy.
03Reducing the number of small orders, the main cost driver in purchasing, cuts processing cost by 20 %.