Cost driver analysis requires:
How many times a task is performed (e.g., number of invoices processed). cost driver analysis example
The distortion is significant: custom tables consume a disproportionately high amount of setup, inspection, and material handling activities, yet traditional costing hides this because their direct labor hours are low. Cost driver analysis requires: How many times a
= $300,000 / 15,000 moves = $20 per move and material handling activities
= $500,000 / 2,500 inspections = $200 per inspection
We perform cost driver analysis in five steps.