Cost Drivers Examples In Service Industry

A cost driver is the unit of an activity that causes the change in activity's cost. Cost driver is any. Some examples of indirect costs and their drivers are: indirect costs for. Revman 5 3 free downloads. In Customer service, cost drivers are Number of service calls attended,. It is likely to continue to become more prevalent in the service industry in the future. Activity-based costing: Theory and practice. In Handbook of Cost Management, edited by B. Brinker, B1-1-B1-33. New York: Warren, Gorham, and Lamont. Activity-based costing for hospitals.

A factory has a machine that requires periodic maintenance. This maintenance incurs costs to be allocated to the products produced by the machinery. Slovarj perenosnih znachenij slov. Therefore, the cost driver is identified and used as a base to distribute the costs. In this example, the cost driver selected is 'machinery hours.' It is determined that after every 1,000 machine hours, maintenance costing $500 is performed.

Therefore, every machine hour results in an eventual 50 cents in maintenance costs that can be allocated to the product being manufactured based on the cost driver of machine hours.