Cost Driver Analysis Example 【iOS】

= $1,000,000 / 50,000 machine hours = $20 per machine hour

| Activity Driver | Standard Chairs | Custom Tables | Total | |----------------|----------------|---------------|-------| | Machine hours | 40,000 | 10,000 | 50,000 | | Number of setups | 200 | 1,000 | 1,200 | | Number of inspections | 500 | 2,000 | 2,500 | | Number of moves | 5,000 | 10,000 | 15,000 | cost driver analysis example

These costs are traced directly using actual resource consumption records (e.g., maintenance logs, payroll records for setup workers, move tickets). We now select drivers that link each activity’s cost to the two product lines. = $1,000,000 / 50,000 machine hours = $20

| Activity | Description | |----------|-------------| | Machine operation | Running saws, planers, CNC routers | | Setup | Preparing machines for different products | | Quality inspection | Checking dimensions and finish | | Material handling | Moving lumber and parts to workstations | For each activity, we determine what causes resource consumption: 000 / 50

= $500,000 / 2,500 inspections = $200 per inspection

= $300,000 / 15,000 moves = $20 per move Step 5: Trace Costs to Products Using Actual Driver Consumption Now we collect data on how many driver units each product line consumes annually.