Question

Which of the following could be considered a cost driver? Select one: a. A service provided by an architecture firm b. A product produced by a manufacturer c. A tax return prepared by a local CPA firm d. All of the above

Answer 1

Answer: d. All of the above

Explanation:

A cost driver refers to the activity that causes an actual change in the cost of a transaction and by extension it's local cost.

For example, cost driver of labor would be the number of people working or cost driver of Electricity paid would be the actual number of units consumed.

In the above, the products and services mentioned are the integral activities for those firms so they are cost drivers to those firms.