Cost Drivers: What are They and How to Identify Them for Cost Forecasting
This not only lowers costs but also shortens project timelines and enhances client satisfaction. Imagine that McDonald’s needs to clean their ice cream machine after every 200 ice cream cones sold. In this instance, the cost driver would be the number of ice cream cones produced. Activity cost drivers are the foundation of activity-based costing, enabling businesses to allocate costs accurately and optimize operations. By understanding the factors that influence costs, managers can make informed decisions, improve efficiency, and align activities with organizational goals. Looking at activity cost drivers can allow
