Do fixed costs have cost drivers?
Simply so, what is an example of a cost driver?
Examples of cost drivers are as follows: Direct labor hours worked. Number of customer contacts. Number of engineering change orders issued. Number of machine hours used.
Furthermore, how do cost drivers affect cost behavior? A cost driver is an output measure of a resource or activity. When the use of a resource or the performance of an activity changes, the level of the cost driver or output measure will also change, causing changes in costs. The sane cost can be direct for one cost object and indirect for other cost objects.
Considering this, what is a cost driver rate?
A cost driver rate is the amount of indirect or variable cost assigned to each unit of cost driver activity. For example, you may apply indirect overhead to direct labor hours as $50 dollars per hour.
How do total fixed costs behave?
Fixed costs do not change based on activity. The cost will stay the same in total as long as activity is within the relevant range. Because fixed costs are fixed in total, the per unit rate will change as production changes.