· Cost Driver Rate = Total Cost of Finishing Activity in a Day / Cost Driver Units = 40 Total Cost / 8 Hours a day = $5. Cost Drivers and Relevant Range. Fixed costs like yearly rent of a factory can’t have a cost driver. Simply because the factory rent would not increase with an increase in production, especially in the short run like a year or www.doorway.rus: 1. Scrap HMS. Old Scrap. Sponge Iron. · An activity cost driver is a component of a business process. Activity cost drivers are used in activity-based costing, and they give a more accurate determination of the true cost of business.
An activity cost driver is a component of a business process. Activity cost drivers are used in activity-based costing, and they give a more accurate determination of the true cost of business. The cost driver rate indicates the rate an activity's cost increases with the volume of activity. For instance, cost driver rate might show the ratio of money earned per product sold or cost per business service offered. This rate gives the business owner a baseline to help in determining the final price for his goods or services. Divide the activity cost by the volume to find the cost driver rate. For example, if you made widgets for a cost of $3, $3,/ = $30 per widget. 37 Related Question Answers Found.
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