These drivers are performed for every single unit produced. The cost varies directly with the number of units.
Choosing the right cost driver is critical for the accuracy of the ABC system. A good cost driver should meet the following criteria: cost driver in activity based costing
| Activity | Cost Pool | Possible Cost Driver | |----------|-----------|----------------------| | Machine setup | Setup labor, supplies | Number of setups | | Quality inspection | Inspection labor, test equipment | Number of inspections | | Purchasing | Purchase orders, vendor management | Number of purchase orders | | Material handling | Forklift, labor | Number of material moves | | Customer service | Support staff, phone costs | Number of customer calls | | Production scheduling | Planner salaries | Number of production runs | These drivers are performed for every single unit produced