Cost drivers and functions. The representative cost drivers in the right column of this table are randomized so they do not match the list of functions in the left column. Function Representative Cost Driver
1. Accounts payable A. Number of invoices sent
2. Recruiting B. Number of purchase orders
3. Network Maintenance C. Number of units manufactured
4. Production D. Number of computers on the network
5. Purchasing E. Number of employees hired 2
6. Warehousing F. Number of bills received from vendors
7. Billing G. Number of pallets moved
Required:
1. Match each function with its representative cost driver.
2. Give a second example of a cost driver for each function.

Matching Functions with Cost Drivers

Function                              Cost Driver

1. Accounts payable            F. Number of bills received from vendors

                                                Number of accounts to be reconciled

2. Recruiting                       E. Number of employees hired

                                               Number of interviews conducted

3. Network Maintenance  D. Number of computers on the network

                                               Number of inspections and visits

4. Production                    C. Number of units manufactured

                                              Number of factory workers

5. Purchasing                   B. Number of purchase orders

                                             Number of vendors

6. Warehousing               G. Number of pallets moved

                                             Number of forklifts in use

7. Billing                           F. Number of bills received from vendors

                                            Number of checks written

Explanation:

a) Data:

Cost Drivers:

A. Number of invoices sent

B. Number of purchase orders

C. Number of units manufactured

D. Number of computers on the network

E. Number of employees hired

F. Number of bills received from vendors

G. Number of pallets moved

b) Cost drivers are the reasons why some particular costs occur.   Remove the root cause the cost will become zero.  Some cost drivers are caused by activities, which consume resources.  Others are caused by the number of customers, products, and channels of production, which consume activities.

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explanation:

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