|A cost driver:
- Is any factor whose change causes a change in the total cost of a related cost object. Hence a change in the level of cost driver will cause a change in the level of the total cost of a related cost object.
Examples of cost driver used in the following business units:
- Research & Development :- Number of research projects, technical complexities of the projects
- Design of products, services & process:- number of products in design, number of parts per product,
- Marketing:- number of advertisement run, number of sales personnel, sales revenue
- Distribution:-number of items distributed, number of customers, weight of items distributed
- Customer services:-numbers of service calls, hours spent in servicing of products.