Cost Driver Analysis

Cost Driver Analysis is the process of identifying and understanding the factors that cause costs to increase or decrease in a business. These factors, known as cost drivers, can include variables like production volume, labor hours, or material costs. By analyzing these drivers, companies can better manage expenses, improve efficiency, and make strategic decisions to enhance profitability. Essentially, it helps businesses find out what really impacts their costs and how they can control or reduce them to improve overall performance.