Cost Driver

A cost driver ( German cost driver ) is a reference value used during the process cost accounting, by which a portion of the overhead costs in a company using defined processes operational needs to be distributed to the cost objects. The cost driver is designed to replace the overhead charge rates used in traditional costing far as possible. Thus, the end products loaded costs are represented more accurately, so that entrepreneurial wrong decisions (eg the outsourcing or the price and terms of policy) can be addressed more effectively.

The cost drivers to behave as possible proportional to the cost of a process or a cost center. So should those benchmarks should be selected that have a significant influence on the process cost amount. For example, if the customer supply a defined process by the company, the number of packets of the packet size or weight of the packages could be a cost driver. The goal is to identify with this size a process cost rate per unit power and thus as variable as the costs.

Determining the most appropriate cost driver

Often, different benchmarks are used as cost driver into consideration that all seem to have a proportional relation to legal height. Therefore, in the alternative, one uses a comparison of the process unit costs with the eligible reference variables (cost drivern ). Is chosen that reference, get the percentage change in the time course of the process unit costs at the next:

Example

In this example stand for the process' customer supply " three possible cost driver to choose from:

• The number of deliveries
• The weight of the supplies or
• The volume of deliveries

From the comparison of the percentage change year turns out that the reference quantity c (volume ) appears to be the most appropriate cost driver, as it has the highest proportion to the process unit costs.

Calculate the process cost rate

In this specific case, the process cost rate is ( based on 2006):

With

• Cost accounting
• Controlling