Chapter 6. Defining the Key Cost Drivers and Developing Strategic Options
Now that you’ve been exposed to the logic of Formula Based Costing, you should have no difficulty recognizing a cost driver. After all, it is a variable on the right-hand side of a mathematical equation. Yet, there are times when I’ve asked participants in my seminars at some of the best companies in the world a question like, “Would the skill of the operators be a cost driver?” and they have replied “yes.” What do you think? I’m sure you are thinking to yourself, “Of course the skill of the operator is a cost driver, since it causes a cost like scrap ...
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