Question

Functions list 1. Accounts payable 2. Recruiting 3. Network Maintenance 4. Production 5. Purchasing 6. Warehousing 7. Billing

Representative Cost Driver 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

1. Match each function with its representative cost driver.

2. Give a second example of a cost driver for each function.

Answer 1

Cost driver means a factor that can causes a change in the cost of an activity. An activity may have more than one cost driver. For example, a production activity may have the following associated cost-drivers: a machine, machine operator(s), floor space occupied, power consumed, etc.

1&2. Matching each function with its representative cost driver & second example

SL NO	FUNCTIONS	COST DRIVER	SECOND EXAMPLE
1	Accounts payable	Number of bills received from vendors	Number of payments processed.
2	Recruiting	Number of employees hired.	Number of interviews conducted.
3	Network Maintenance;	Number of Computers on the network.	Number of employees engaged in the maintenance of the network
4	Production	Number of units manufactured.	Number of units issued for production, Number of units scrapped, Number of units reworked.
5	Purchasing	Number of purchase orders	Number of different types of materials purchased
6	Warehousing	Number of pallets moved	Distance of deliveries made, Number of employees engaged in warehousing
7	Billing	Number of invoices sent	Number of credit sales transactions