A cost driver ( German cost driver ) is in the course of activity-based costing applied reference, part of that help overheads in a company via defined processes stress to meet the cost units to be distributed. The cost driver is intended to largely replace the overhead rates used in traditional cost accounting . This shows the costs charged to the end products more accurately, so that wrong business decisions (e.g. in outsourcing or pricing and conditions policy ) can be better counteracted.
The cost driver should be as proportional as possible to the costs of a process or a cost center . So those reference values should be chosen that have a significant influence on the level of process costs. For example, if customer delivery is a process defined by the company, the number of packages, the size of the packages or the weight of the packages could be a cost driver. The aim is to use this size to determine a process cost rate per service unit and thus to make the costs variable.
Determination of suitable cost drivers
Often different reference values come into consideration as cost drivers, all of which seem to have a proportional relationship to the level of process costs. For this reason, a comparison of the individual process costs with the relevant reference values (cost drivers) is used as an alternative. The reference value selected is the one whose percentage change over time comes closest to that of the individual process costs.
|Fiscal year||Costs of the "customer delivery" process||Number of deliveries||Weight of supplies||Volume of deliveries|
|2013||€ 23,411||843 pcs.||6.747 kg||466 m³|
|2014||€ 25,992||890 pcs.||6.821 kg||520 m³|
In this example, there are three possible cost drivers to choose from for the "customer delivery" process:
- the number of deliveries
- the weight of the supplies or
- the volume of deliveries
A comparison of the percentage changes to the previous year shows that the reference variable c (volume) appears to be the most suitable cost driver, as it has the greatest proportionality to the individual process costs.
Calculation of the process cost rate
In the specific case, the litigation cost rate is (based on 2013):
- : Process costs per service unit (process cost rate)
- : Litigation costs
- : Power units