Question

Explain the concept of cost drivers. Discuss the factors affecting the selection of cost drivers.​

Answer 1

A cost driver is a factor which determines the cost required for the performing of an activity.

Explanation:

The selection of the cost drivers is highly dependent on the following factors:

a) Number of customers: it denotes the cost required to offer the products or services to the customers.  

b) Supply units: the type of supply units highly determines the cost drivers. If the supply channels are lengthy, then the whole supply of the product to the customer will be cost effective.  

c) Production and manufacturing cost: This is dependent on the cost required for producing a quality product.  

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Discuss the factors affecting the selection of cost drivers.​

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Answer 2

The cost drivers are activities that relates to the costing principles.

Explanation:

• A cost driver is a driver that drives the cost of the activity and they reflect the linkages and interrelationships that affect them.  

• The activity-based costing is a method related to the costing activity and is based on the belief that activity based on cost should be established between the activities and products.

• It generally includes indirect cost variable costs and fixed costs. Example, the indirect cost of maintenance and indirect cost of handling raw material.

• The factors that impact the factor of cost drivers are the Degree of correlation, Cost of measurement, Behavioral effects.

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• brainly.in/question/14466332 answered by Rohit3983.