A is the unit of activity that causes a cost to change.
| Industry | Cost | Cost Driver | | :--- | :--- | :--- | | Restaurant | Electricity bill | Number of covers (guests served) | | E-commerce | Shipping fees | Number of boxes shipped OR weight | | Hospital | Nursing staff | Patient days (total nights in beds) | | Law firm | Paralegal time | Number of documents reviewed | | Manufacturing | Machine maintenance | Machine hours run | cost driver
If you try to manage the cost (salaries) without managing the driver (tickets), you will always be behind. A is the unit of activity that causes a cost to change
A cost driver is not an accounting buzzword. It is a . It is a
If you don’t know what your cost drivers are, you aren’t managing your business. You’re just reacting to it.
What the Heck is a Cost Driver? (And Why It’s the Secret to Real Profitability)