A cost driver is the basis for manufacturing overhead allocation. There is a direct relationship between the quantity of the consumed cost driver and the amount of the incurred cost.
Examples of costs drivers are:
- Labor hours
- Machine hours
- Volume of output
A cost driver is used for setting the following:
- A predetermined overhead rate for manufacturing operations.
- A unit of measure for both standard and actual workloads of manufacturing operations.
A multioperation make-to-order process includes registering a cost driver that you want to use for accounting of predetermined overhead.
To manage cost drivers, use the Cost drivers catalog. It is available if the Enable Production subsystem checkbox is selected in Settings > Production.
In the Cost drivers catalog, you can do the following:
Viewing cost drivers
To view cost drivers:
- Go to Production > Catalogs > Cost drivers.
The Cost drivers list contains the following column:
- Description. A cost driver name or short description.
To quickly find a cost driver:
- Sort the Cost drivers list by clicking its header. To change the sorting order, click the header again.
- Search the Cost drivers list using the search field above the list.
Registering cost drivers
To register a cost driver:
- Go to Production > Catalogs > Cost drivers.
- Click Create.
- In the Cost driver (create) window, enter the cost driver name or short description.
- Click Save and close.
Editing cost drivers
To edit a cost driver:
- Go to Production > Catalogs > Cost drivers.
- Double-click a cost driver line.
- Edit the cost driver description.
- Click Save and close.