Cost driver

<h2 id="examples">Examples</h2>
<p>If more people eat in a restaurant, the catering cost will increase, although revenue will also increase.
</p><p>Some examples of indirect costs and their drivers are: indirect costs for maintenance, with the possible driver of this cost being the number of machine hours; or the indirect cost of handling raw-material cost, which may be driven by the number of orders received; or inspection costs that are driven by the number of inspections or the hours of inspection or production runs. In <a href="/facts/Marketing/LttVQ66t">marketing</a>, cost drivers include the number of advertisements, number of sales personnel etc. In <a href="/facts/Customer_service/hNjARTTE">customer service</a>, cost drivers include the number of service calls attended, number of staff in service department, number of warranties handled, hours spent on servicing etc..
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<h2 id="further-reading">Further reading</h2>
<ul><li><i>Cost Accounting: a managerial emphasis</i>, 12th Edition (2005) by <a href="/facts/Charles_T._Horngren/K0TBTo5W">Charles T. Horngren</a>, George Foster and <a href="/facts/Srikant_Datar/Nm9J8ptU">Srikant Datar</a></li></ul>
<h2 id="see-also">See also</h2>
<ul><li><a href="/facts/Activity-based_costing/jVh1wQIa">Activity-based costing</a></li>
<li><a href="/facts/Fixed_cost/BfGf8r1Q">Fixed cost</a></li>
<li><a href="/facts/Variable_cost/FRwUSFp5">Variable cost</a></li>
<li><a href="/facts/Value_chain/nIfCnfcA">Value chain</a></li></ul>

<h2 id="references">References</h2>

<ol>
<li id="fn:1"><p>Porter, M., Competitive Advantage, [page needed] <a href="/wiki/Wikipedia:Citing_sources" target="_blank">/wiki/Wikipedia:Citing_sources</a> <a href="#fnref:1" class="footnote-back-ref">↩</a></p></li>
<li id="fn:2"><p>Strategic Cost Management: The New Tool for Competitive Advantage by Shank and Govindarajan <a href="#fnref:2" class="footnote-back-ref">↩</a></p></li>
</ol>

Cost driver open-in-new

Cost driver