Cost drivers are quizlet

The cost driver is that variable or factor which has an effect and causes the relationship with the total cost. This is the cause, and the cost incurred is the effect of it. Its analysis means identifying all the possible cost drivers for a particular type of activity or cost etc. and explains their cause and effect relationship with the event. 3. When the high-low method is used to estimate a cost function, the variable cost per unit is found by a. performing regression analysis on the associated cost and cost driver database. b. subtracting the fixed cost per unit from the total cost per unit based on either .  · Economies of scale are cost advantages companies experience when production becomes efficient, as costs can be spread over a larger amount of goods.

the relative portion of unit or dollar sales that are derived from each product. Which of the following best defines an organizational cost driver? Choices concerning the organization of activities and the involvement of persons inside and outside the organization in decision making. Three cost drivers are used to estimate the cost of processing insurance claims. The cost drivers are: (1) claim amount, (2) age of vehicle in accident and (3) age of driver in accident. The percentages attributable to the cost drivers are 50% for claim amount, and 15% for each of the other two cost drivers. Cost allocation is the assignment of costs in cost pools to cost objects. The cost objectives may be products, services, customers, processes, or anything for which we want to know the cost. Product costing uses cost allocation to calculate product costs. Product costing is an application of cost allocation where products are the cost objects.

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