CMA Foundation · Fundamentals of Financial and Cost Accounting · Cost, Cost Centre, Cost Unit and Cost Drivers
In a cost accounting system, a cost driver is best described as:
A cost driver is a factor that causes the cost of an activity to change, for example machine hours, number of set-ups or purchase orders. It is not the cost unit or cost centre, which describe the unit measured and the location where costs are accumulated.
- AA factor that causes a change in the cost of an activityCorrect
- BThe unit of product for which cost is ascertained
- CA segment of the organisation to which costs are charged
- DThe total of all fixed costs of a period
Explanation
A cost driver is the factor or event that causes the cost of an activity to change, such as number of set-ups or machine hours. A cost unit is the measurement unit and a cost centre is the location or function, so the other options describe different terms.
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