Cost drive
Is a variable , such as the level of activity or no. of units produced which has an effect over costs for a given period of time
The relationship between the cost driver and the cost is a cause and effect relationship
For example
a company that is producing milk bottles
The more the no. of bottles produced , the more the manufacturing variable costs are
No. of bottles is the cost driver when it increases , it has an effect over the cost " the manufacturing variable costs such as the labor cost "
The more the no. of bottles produced , the more the manufacturing variable costs are
No. of bottles is the cost driver when it increases , it has an effect over the cost " the manufacturing variable costs such as the labor cost "
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