Cost drivers represent the organization’s activities and have a relationship to the outputs of the organization (products and services), and are used to assign the costs of activities to the outputs rationally.

• Cost drivers’ quantity (numbers) is collected from Enterprise System (ERP) or other core systems.
• Cost drivers carry various attributes reflecting the nature and the behavior of the costs.
  • Incurrence Factor
    • Linked to the incurrence of the costs and reflects the resources consumed by such activities.
  • Objective Target
    • Representing the objective of the costs and link them to the products and services (cost objects) of the respective Activity-Units
  • Dynamic/Static
    • Dynamic cost drivers directly represent the business activities (e.g. number of hours spent, volume of materials processed, etc.), while static cost drivers are to be inputted periodically (e.g. space occupied, etc.).